Is Tesla Responsible for Nearly $1 Billion Crypto Liquidation?

Paigambar Mohan Raj
Source: OutlookIndia / pngarts

Tesla, one of the largest automobile manufacturers in the world, recently published its Q2 earnings statement. In the report, the company stated that it had sold 75% of its Bitcoin (BTC) holdings, and the sale amounted to about $936 million. Nonetheless, the company revealed in its SEC filing that it had digital assets, or crypto, worth $222 million as of the 30th of June.

As per the statement,

“During the six months ended June 30, 2022 and 2021, we purchased and/or received an immaterial amount and $1.50 billion, respectively, of digital assets.”

The statement further states that the company converted 75% of its holdings into fiat. However, it does not clarify which crypto it refers to. Most digital assets were likely Bitcoin, as Tesla was the second largest currency holder. However, CEO Elon Musk did confirm on Twitter that he had not sold any of the company’s Dogecoin (DOGE) holdings.

Additionally, Tesla recognized $170M in impairment losses for the six-month period that ended on June 30, 2022, as a consequence of fluctuations in the carrying value of its cryptocurrency assets. The company made gains of $64 million for the same. However, Tesla made gains of $128 million on their digital asset conversions during the six months, which ended on June 30th, 2021.

Did Tesla’s crypto sale bring the market down?

The SEC filing points to the fact that Tesla sold its Bitcoin (BTC) or other crypto holdings sometime before the 30th of June. This would lead to speculation if the company sold its BTC holding before or during the market crash. If that is the case, then Tesla could be responsible for liquidating nearly $1 billion from the crypto market. However, there is no confirmation on when Tesla made their crypto sales.

Musk revealed that the sell was to maximize Tesla’s cash positions. He cited the uncertainty in China’s COVID-19 lockdown alleviation as one of the reasons.

At press time, $TSLA was trading at $816.73. Bitcoin (BTC), on the other hand, was trading at $22,051.19.