Elon Musk’s Tesla Sells 75% Of Its Bitcoin And Here’s Why

Tesla said it sold about 75% of its bitcoins between April 1 and the end of June. Those sales that occurred in the second quarter added $936 million in cash to its balance sheet and were recorded as negative impairment, Tesla said in its second-quarter earnings report.

Over the past year, the price of bitcoin peaked around $67,000 in November 2021, and by the end of June 2022, it was trading at just under $20,000.

In February 2021, Tesla said it had purchased $1.5 billion worth of bitcoin to diversify its balance sheet outside of the country and maximize profits. Then, in May, Tesla CEO Elon Musk decided that Tesla would no longer accept bitcoin to buy its cars, just two months after he started accepting them. The price of bitcoin fell over 4% after Musk tweeted about his decision.

$218 million in “digital assets” as of June 30th.

Tesla’s balance sheet shows that the company had $218 million in “digital assets” as of June 30, compared to approximately $1.2 billion in the last three quarters and $1.3 billion in the next quarter ending June 30, 2021 of the year.

Presumably, most of Tesla’s remaining digital assets are bitcoin, but Musk said on a conference call that Tesla did not sell its Dogecoin. As TechCrunch notes, Musk said he personally owns Dogecoin, but Tesla still hasn’t said he owns them.

“We have converted the majority of our bitcoin assets into fiat currency, offsetting the depreciation costs of the rest of our assets, worth $106 million,” a Tesla spokesman said on a conference call with investors.

25% increase in car production

Musk chimed in to explain that Tesla’s decision to convert its bitcoin holdings to fiat currency was not a “verdict” on bitcoin, but was made to improve its cash flow due to uncertainty over China’s COVID-19 restrictions that impacted the Shanghai Gigafactory. . “The reason we sold some of our bitcoin holdings was the uncertainty about when China would ease COVID-19 restrictions,” Musk said.

Tesla said total production of Model S and X, and Model 3 and Y reached 258,580 units in the second quarter, up 25% from last year. The total shipments reached 254,695, up 27% from last year. However, production in the second quarter was also down about 17% from the previous quarter, and the company delivered 55,000 fewer vehicles from the previous quarter.

Tesla said it continues to experience production challenges due to COVID lockdowns, global supply chain disruptions, labor shortages and “logistical challenges that limit our ability to operate our factories at full capacity.”

Prices that may fall

Mr. Musk also answered questions about whether the company would cut prices after they raised prices by 10% across the line in June due to inflation, as Elektrek reported at the time. In short, maybe, but it depends on inflation and is out of its control, Musk said. Musk said that because there are six months to one year between order and delivery, Tesla must “anticipate the likely rate of inflation over that period.”

“There may be a slight decrease in car prices, but this mainly depends on macroeconomic inflation.” Musk believes inflation will come down by the end of 2022.

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