Leading electricity car manufacturer Tesla has revealed it has converted 75% of its Bitcoin holdings into fiat currency, selling $936 million worth, the company reported Wednesday in its earnings report.
“As of the end of Q2, we have converted approximately 75% of our Bitcoin purchases into fiat currency. Conversions in Q2 added $936M of cash to our balance sheet,” the company said in the earnings presentation.
At the end of 2021 Tesla held about $2 billion worth of BTC and was reported at 43,200 Bitcoin. It’s fallen about 50% since then. Initial purchases averaged $32,610 but some were added later and there was a stream of different prices when the company was accepting Bitcoin payments.
The company ended the second quarter with just $218 million in BTC, down from $1.26 billion in the previous three quarters.
It did not make known how bad the impairment was, however holding 42,000 Bitcoin and selling 75% of that amount for $936 million, would equate to an average selling price of roughly $29,000/USD per Bitcoin.
Bitcoin ended the second quarter at a price of about $18,700, meaning Tesla avoided a substantial impairment charge on its holdings by selling earlier in the quarter.
In terms of earnings , the EPS at $2.27 beat the estimate of $1.80 while revenue was at 16.934 billion compared to 17.2 billion expected. A year ago revenues were at $11.958 billion.
Gross margin was at 27.9% compared to 28.4% last year. Exclude zero-emission credits and it falls to 26.2%.
For the broader market, the comments in the conference call will be interesting. Recently he said he had a ‘super bad’ feeling about the economy.
Ultimately it is unknown why Tesla and Musk have decided to sell off their Bitcoin holdings, maybe it is out of fears that the economy, and wider cryptocurrency market still has some pain to experience.
It could be centred around the notions and concerns still surrounding the environmental impacts of Bitcoin mining, with the company ceasing the acceptance of Bitcoin for car payments last May citing this reason.
Musk did claim that Tesla may resume accepting Bitcoin in the future once it can confirm the mining industry is trending towards renewable energy.
Recently a Q2 2022 report from the Bitcoin Mining Council found that 59.5% of the mining industry runs on sustainable power. That’s the fifth quarter in a row for which that figure has stood above 50%.
“I do believe that long term, renewable energy will actually be the cheapest form of energy, but it just doesn’t happen overnight. But as long as there is a long-term trend toward the use of renewable energy by the community, Tesla can support that.” according to Elon Musk.
Elon might have to reconsider Bitcoin payments again.
Maybe Elon simply likes Dogecoin more.
Elon likes to do Elon things. Given he sold in Q2, maybe he is scooping up the bottom in Q3?
The price of bitcoin slumped about 1.7% to $23,300 following the news, but has since recovered and is trading at $23,600 as of writing.
Since posting of this article Elon has been quoted as stating that selling is not a verdict on Bitcoin, but the company needed cash.
“We are certainly open to increasing our Bitcoin holdings in the future”.
