Tech

Tesla Sold $936M of Bitcoin, Kept its Dogecoin Reserves

Elon Musk is an icon within crypto. This is due in large part to his association with the Dogecoin meme token – Musk was known as “the dog dad” for a few months last year – but also because Tesla is one of the most prominent institutional Bitcoin investors. Or at least it was.

in the Tesla’s latest earnings reportreleased on Wednesday, the company announced that it has sold the majority of its bitcoins: “We have converted approximately 75% of our bitcoin purchases into fiat currency.

in one subsequent profit callMusk explained that the selloff is related to the ongoing COVID lockdowns in China, the world’s largest auto market and also where many Tesla vehicles are made.

“The reason we sold some of our bitcoin holdings is because we were unsure when the Covid lockdowns in China would ease. Therefore, it was important for us to maximize our liquidity position in the face of uncertainty,” Musk said. “We are certainly open to increasing our bitcoin holdings in the future, so this should not be construed as a judgment on bitcoin.”

“We haven’t sold any of our dogecoins, we still have our dogecoins,” Musk added.

Tesla has $621 million in cash, according to Wednesday’s earnings report, meaning cash flow would have been negative were it not for the $936 million bitcoin sale.

Tesla’s $1.5 billion purchase of Bitcoin, in an SEC filing in February 2021contributed to the euphoria of the cryptocurrency market that caused the price of Bitcoin to explode from around $20,000 in December 2020 to $60,000 in March 2021 Peak value of $2 billion. Tesla originally bought bitcoin to “give us more flexibility to further diversify our cash holdings and maximize returns,” the company said in its 2021 SEC filing.

Spurred in large part by encouraging tweets from Musk, Dogecoin Beaten 70 cents last May and briefly reached a market capitalization of 70 billion US dollars. It is unknown how much Dogecoin Tesla owns, although the company’s earnings report states that it holds $218 million in digital assets. Much of that is likely to be Tesla’s remaining bitcoin.

Crypto prices have since fallen precipitously from their 2021 highs. Bitcoin is down 48% year-to-date, while Ether, the second largest crypto, is down 57% since January 1st. Dogecoin is currently just over 7 cents.

Despite being championed by bitcoin and crypto communities, Musk has made statements that both praise and criticize the technology. “Bitcoin is almost as bs as fiat money. The keyword is ‘almost’.” he said in February. “However, if fiat currencies have negative real interest rates, only a fool wouldn’t look elsewhere.”

After announcing that Tesla would accept bitcoin as payment for its electric cars, Musk backed down, saying it would suspend such payments for environmental reasons given the amount of fossil fuel its production requires. “Cryptocurrency is a good idea on many levels and we believe it has a bright future, but it must not come at a great environmental cost,” he tweeted.

Tesla did not respond to a request for further comment.

Correction: This story initially misrepresented the amount of money Tesla received for selling cryptocurrency. The company gained $936 million in cash from the transaction.

Tesla Sold $936M of Bitcoin, Kept its Dogecoin Reserves Source link Tesla Sold $936M of Bitcoin, Kept its Dogecoin Reserves

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