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Bitcoin price affected as Tesla discloses it sold 75% of BTC holdings

Published by
Nonhlanhla P Dube

On Wednesday, July 20, Tesla revealed its Q2 2022 earnings, in which the electric automaker shed some light on its Bitcoin holdings. According to the data, Tesla (NASDAQ: TSLA) sold 75% of its BTC holdings to increase its cash reserves.

The business stated that it was forced to make this difficult decision due to the widespread COVID shutdown in China last quarter. As a result, Tesla’s Shanghai manufacturing was closed for 22 days in April. Tesla CEO Elon Musk stated during the earnings call on Wednesday: 

“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. This should not be taken as some verdict on Bitcoin. It’s just that we were concerned about overall liquidity for the company.”

Musk also stated that the corporation is “absolutely open to increasing our bitcoin holdings in the future.” However, the business stated that it has not sold any of its Dogecoin (DOGE).

On Tuesday, Bitcoin was showing signs of life, climbing closer to R414K. However, the revelation that Tesla is selling its BTC could have a detrimental impact on the cryptocurrency market. BTC is currently trading 2% lower and extremely close to its 200-week moving average of R393K.

Tesla reports a R1.8 billion bitcoin loss

Tesla CFO Zach Kirkhorn stated that the company generated a little profit on the sale of BTC. However, all earnings were lost when Tesla wrote off the value of the remaining BTC holdings when the crypto market crashed.

The corporation has an unrealized loss of R1.8 billion based on the current BTC price. It’s unclear whether Tesla would invest in Bitcoin again, given that the firm is currently suffering from a liquidity shortage. This, in turn, may dissuade other firms from placing their excess cash in BTC.

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Nonhlanhla P Dube

Nonhlanhla P Dube is a senior news reporter at Rateweb. Nonhlanhla is a student of International Relations at the University of South Africa. She reports primarily on personal finance and economics. You can contact her directly by email at nonhlanhla@rateweb.co.za

Published by
Nonhlanhla P Dube
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