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Highlights
- Tesla, which is another big investor in Bitcoin after MicroStrategy, has sold a major chunk
- Elon Musk has remarked that the company was “open to increasing Bitcoin holding in future”
- Bitcoin’s price, which is on the rise of late, is yet to show any deep negative impact of this news
Bitcoin is being held by large companies like MicroStrategy and Tesla in their portfolios. This single statement arguably drove many enthusiasts toward cryptocurrencies. Now, Tesla has made it clear that the electric carmaker has “converted approximately 75%” of its Bitcoin holding into fiat currency, possibly the US dollar.
What does the latest earnings statement of Tesla reveal about its Bitcoin holding? What has CEO Elon Musk, who is popular for his pro-crypto stance, said after Q2 earnings were reported? What could be the likely impact of the development on Bitcoin’s price? Let us explore.
Tesla and Bitcoin
According to reports, the company purchased nearly US$1.5 billion worth of Bitcoins at the beginning of 2021. MicroStrategy, led by another pro-crypto CEO Michael Saylor, has been the other major company to hold Bitcoins. But unlike MicroStrategy, Tesla has opted to do away with much of its holding.
The earnings statement has only two mentions of the term ‘Bitcoin’ with the first as the impact on Tesla’s operating income due to Bitcoin’s impairment. The conversion of nearly three-fourths of its Bitcoin holding contributed US$936 million in cash to the company’s balance sheet. Aside from these details, the statement has no other mention of either Bitcoin or any other crypto.
Elon Musk’s remarks
On a call with analysts after the second quarter earnings statement was released, CEO Musk remarked that the company was “open to increasing Bitcoin holding in future”. He also said that any liquidation over the quarter cannot be viewed as any verdict on Bitcoin.
Separately, Musk is also said to have remarked that “crypto is a sideshow to the sideshow” and that the company does not think much about these assets. What exactly this statement means, especially when it comes from a person who is notorious for his eccentric approach, is open to speculation. What Musk clearly said is that Tesla had not liquidated its Dogecoin holding.
Bitcoin’s price
Bitcoin’s price has been moving upward over the past nearly one week. As of writing, it was trading comfortably at over US$23,000. However, Tesla’s Q2 earnings statement seems to have made some impact, which will become clear in some more time. Ether, the second-biggest crypto after Bitcoin, is also surging of late, which is indicative of an overall positive sentiment in the cryptoverse.
It is not clear at what price did Tesla liquidate its Bitcoin holding. But the transaction was most likely made at a loss since the price of Bitcoin has continually declined over the course of this year.
Data provided by CoinMarketCap.com
Bottom line
Tesla has converted a large chunk of its Bitcoin holding into cash. Musk has, however, not commented negatively on cryptocurrencies. Bitcoin has been on a rise lately, and how Tesla’s news impacts the price movement is yet to be seen.
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