Science

Tesla sold 75% of its bitcoins despite Elon Musk’s enthusiasm for cryptocurrencies – Reuters

Elon Musk is something of a crypto icon. This is largely due to its association with dogecoin meme, but also because Tesla is one of the largest institutional investors in bitcoin. At least that’s how it was.

In Tesla’s latest earnings report released on Wednesday, the company said it had sold most of its bitcoin: “We have converted approximately 75% of our bitcoin purchases into fiat currency. Transformations in the second quarter added $936 million to our balance sheet.”

Tesla’s purchase of $1.5 billion worth of bitcoins. disclosed in a document filed with the SEC in February 2021.contributed to the market euphoria over the cryptocurrency that sent the price of bitcoin skyrocketing from around $20,000 in December 2020 to $60,000 in March 2021. Tesla’s bitcoin reserves at one point peaked at $2 billion. Tesla initially purchased bitcoin to “give us more flexibility to diversify and maximize returns on our cash,” the company said in a 2021 SEC report.

Since then, cryptocurrency prices have plummeted from 2021 highs. Bitcoin has fallen 48% since the beginning of the year, while Ethereum, the second largest cryptocurrency, fell 57% since Jan 1. There is some debate as to whether Tesla’s bitcoin sale was made out of a need to maintain cash flow, or whether it reflects disbelief in bitcoin and cryptocurrencies in general. Tesla has $621 million in cash, according to its earnings report released on Wednesday, meaning that cash flow would be negative without $936 million worth of bitcoin sales.

While Musk is supportive of bitcoin and the crypto community, he has made statements praising and criticizing the technology. “Bitcoin is almost as absurd as fiat currency. The key word is “almost,” he said in February. “However, when a fiat currency has a negative real interest rate, only a fool would not look for something else.”

After announcing that Tesla would accept bitcoin as payment for its electric vehicles, Musk reversed his decision and said he would suspend such payments for environmental reasons, given the amount of fossil fuel energy needed to produce it. “Cryptocurrency is a great idea on many levels and we believe it has a great future, but it cannot harm the environment,” he tweeted.

Tesla did not immediately respond to a request for additional comment.

Correction 15:10 PT: This story first misrepresented the amount of money Tesla received for selling cryptocurrencies. The deal earned the company $936 million in cash.

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