NEW YORK, July 22 — When releasing its second quarter results, Tesla revealed that it has sold some 75 per cent of its bitcoin holdings. The firm’s founder and CEO, Elon Musk, says that the reason for this sell-off was to boost Tesla’s cash flow, and that the move should not be taken as a rebuttal of the cryptocurrency.
Elon Musk and bitcoin have an eventful relationship. His Tesla company is a high-profile and influential tech startup that was one of the first to invest in cryptocurrency and, in particular, in bitcoin. In February 2021, the US company made a US$1.5 billion (RM6.7 billion) investment in the first of the cryptocurrencies. At the time, Tesla touted the “long-term potential” of these new digital assets, and acted as a catalyst for a market ready to take off. Just over a year later, the electric car-maker has sold 75 per cent of its bitcoin holdings for US$936 million. The company’s current digital asset reserves now stand at about US$218 million.
Could Tesla have become wary of the so-called “crypto winter“? Elon Musk provided some insight after the earnings release. ”It should be mentioned that the reason we sold a bunch of our bitcoin holdings was that we were uncertain as to when the Covid lockdowns in China would alleviate. So it was important for us to maximize our cash position, given the uncertainty of the Covid lockdowns in China,” the Tesla boss said. Indeed, even though cryptocurrencies are banned in China, the Chinese market is extremely important for the electric carmaker. Tesla has built a giant factory there, and China is the second-largest market in terms of sales behind the United States.
A change of heart over crypto? In spite of that, Tesla’s boss isn’t giving up on the flagship cryptocurrency. “This should not be taken as some verdict on bitcoin,” he added, stating that Tesla was ready to increase its crypto holdings in the future. His influence on the cryptocurrency market remains particularly strong, and each of his tweets about these digital assets stirs up the industry like almost nothing else can. The very fact of his faith in Dogecoin — with which it is possible to purchase some Tesla products — allows this niche cryptocurrency to survive.
The sale of these holdings probably took place during the month of June. The market is therefore not experiencing any major impact at the moment. However, the next few days could reveal more about the market’s ability to withstand this bad news. But the speed at which this industry moves means that it’s important to take a step back from current events, because, as this news shows, it’s a sector in which things change a lot, and very quickly. — ETX Studio