Tesla, one of the biggest automobile companies in the world, released its Q2 earnings statement yesterday. To the surprise of many in the crypto community, the report revealed that the company had sold 75% of its Bitcoin (BTC) holdings. The sale added $936 million to the Tesla treasury.
The Bitcoin sold by Tesla was worth close to $2 billion at the end of 2021, and its value has decreased by nearly 50% at current rates.
The move was as unexpected as it was surprising. Tesla was the second largest Bitcoin holding public company after MicroStrategy. The automotive giant had more than 42,000 BTC in its reserves, accounting for 0.204% of the total supply.
Why did Tesla offload its Bitcoin holdings?
Tesla first began its ambitious Bitcoin initiatives in the first quarter of 2021. The company cited reasons for diversification and becoming more flexible. Additionally, the company planned to hold long-term and accumulate BTC from customer transactions.
However, this was not to last. In May of 2021, CEO Elon Musk revealed that Tesla would not accept Bitcoin as payment. Musk blamed the decision on the impact Bitcoin mining had on the environment. Nonetheless, he did say that Tesla would not sell any of its BTC holdings. In addition, he went as far as to Tweet that Tesla has diamond hands.
Come Q2 of 2022; things have taken a dramatic turn. As crypto winter hits the industry, Tesla has done a complete 180-degree flip on its words. And this time around, the company has not cited environmental reasons. Musk has revealed that Tesla sold its Bitcoin holdings mainly to maximize its cash position.
Musk stated,
“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.”
Nonetheless, Musk also said that this was not a judgment on Bitcoin. In addition, he also said that Tesla is open to the idea of increasing its crypto holdings in the future. But he did say that crypto is not contributing to a sustainable future.
During the results call, when asked about bitcoin’s ability to serve as an inflationary hedge, Musk stated that Tesla’s primary objective is to hasten the switch to sustainable energy. He dubbed BTC as “a sideshow to a sideshow.”
However, Musk has confirmed that the company has not sold any Dogecoin (DOGE) holdings. Musk is probably the most prominent proponent of DOGE, and this will be a sigh of relief for DOGE holders.
At press time, BTC was trading at $22,761.86, down by 2.2% in the last 24 hours.