Additionally, the SpaceX CEO remains bullish toward decentralized technologies and believes that the future will somehow be tied to it. Bitcoin paid to Tesla will be retained as Bitcoin, not converted to fiat currency. Tesla and Elon Musk both seem to be having a not-so-great financial period. And the big win for the BTC market that provided needed liquidity for so many negative events. Get live Share Market updates and latest India News and business news on Financial Express.
Steep investments in the new factories, along with lower car sales, caused Tesla’s operating profits to drop nearly a third last quarter, the biggest drop since 2019. “Macro factors are having a bigger role in bitcoin’s price, such as Fed rate hike decisions and inflation,” Chris Kline, co-founder of Bitcoin IRA, a digital asset technology platform, said in an email to CNN Business. Compared to last quarter, the company’s revenue from selling regulatory credits to other automakers dropped by almost 50 percent.
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Bitcoin price plunged from around $46,000 at the start of the quarter to below $19,000 during the period, which has also been dubbed a “crypto winter”. Now, Tesla has reportedly offloaded 75 percent of its remaining Bitcoin holdings, the BBC reports — it had already sold a bunch— in another sign that major players are starting to grow wary of an impending “crypto winter.” The stake was ambitious, especially since Tesla already claimed more than $19 billion in cash and cash equivalents in hand just a few months earlier. But as is often the case, Musk seemed ahead of the curve—until he decided to re-write the rules once again.
- Presumably most of Tesla’s remaining digital assets are Bitcoin but Musk said on an earnings call that Tesla hadn’t sold its Dogecoin.
- The price of bitcoin fell about 1.7% to $23,300 immediately following the release of the earnings report, but rebounded to its previous levels after Musk made his comments on the earnings call.
- The company has not been immune to global supply chain issues and economic woes.
- Musk also addressed questions about whether the company would reduce prices after raising them across its whole line in June by 10% due to inflation, as reported by Elektrek at the time.
Outspoken Barstool Sports founder Dave Portnoy thinks that investors might miss opportunities to invest in the stock market if they are dominated by fear. Upon its bitcoin purchase announcement, Musk also announced the company https://bitcoinvaultexplorer.com/tesla-sold-bitcoin-the-reason-why/ would take bitcoin as payment for its vehicles. Tesla’s remaining digital asset holdings total $218 million, a sharp drop from its previous stash of $1.2 billion, which had gone untouched over the previous three quarters.
Tesla briefly accepted Bitcoin for vehicle purchases, but stopped the practice in May 2021 due to concerns about the environmental toll of Bitcoin mining. It’s just that we were concerned about overall liquidity of the company given shutdowns in China,” Musk said. The April shutdown in Shanghai led Tesla’s car production to fall 15% from the previous quarter—the biggest quarter-to-quarter drop since the start of the pandemic.
1Tesla sells most of its Bitcoin holdings
If this proves to be true, expect to see tweets, memes, and think pieces on how much the company would have made if their hands weren’t made of lettuce every time bitcoin pumps. First, Do Kwon’s ill-fated experiment of an algorithmic stablecoin failed miserably. The Luna Foundation Guard had to sell approximately 800K coins to try to defend the UST peg to the dollar. The bitcoin market suffered, sure, but it proved it had the liquidity to manage this enormous sell-off.
He told Bloomberg at the Qatar Economic forum that he didn’t advise people to invest in crypto. “I have never said that people should invest in crypto.” Interestingly, by the time he made that remark, Tesla had probably already sold 75% of its Bitcoin holdings. “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.” Elon Musk’s Tesla, which caused a stir last year when it revealed a major investment in Bitcoin, has now sold off most of its holdings of the cryptocurrency.
Musk had said that the company could resume accepting bitcoin once it conducts due diligence on the amount of renewable energy it takes to mine the cryptocurrency. In terms of profitability, the company is still doing better than it did in Q2 2021, where it made $1.1 billion on $11.9 billion in revenue. The company attributes that to several factors, including “lower stock-based compensation expense,” more vehicle deliveries compared to last year, and an improved average selling price. This is the first full quarter since Tesla raised the prices on all of its cars by as much as 10 percent, and it raised prices again on select models in June. Despite the price increases, the company has broken with its trend of earning more per car each quarter. Shortly after its Bitcoin purchase, Tesla said it would start accepting bitcoins as payment for its cars.