“The reason we sold off a bunch of our bitcoin holdings was because we didn’t know when the covid lockdowns in China were going to ease,” Musk said. “We are certainly open to increasing our bitcoin holdings in the future, so this shouldn’t be taken as a verdict on bitcoin – it’s just that we were concerned about the overall liquidity of the business. “
Musk was enthused about bitcoin last year when the company first announced it was investing $1.5 billion in the cryptocurrency, claiming on Twitter that the electric car maker would soon accept the digital currency as means of payment. He said Tesla would not convert its bitcoins received from payments into fiat currency or paper money.
But he was quick to recall his enthusiasm, saying in May 2021 that he was concerned about Bitcoin’s potential environmental impact — because the currency relies on powerful computer networks — but that the company “still wouldn’t sell any bitcoin.”
Tesla’s purchase of bitcoins was seen as an investment in the future, a way to invest money as the company entered a period of steady profitability. But since its purchase, confidence in bitcoin and cryptocurrency in general has plummeted – and the sale of Tesla represents another grim milestone for crypto.
Bitcoin has plunged over the past year as confidence in crypto as an alternative form of currency has declined. Bitcoin values also reacted harshly to the Tesla news, dropping to nearly $23,000, with the currency remaining well below late-2021 highs of over $60,000. Tesla bought its bitcoin as the currency traded above $30,000.
Tesla posted a profit of $2.26 billion, the report said, down from last quarter but well above its figure a year ago.
Tesla’s bitcoin sale boosted its quarterly numbers; the company would have recorded negative free cash flow, a figure reflecting the money available to spend, if it had not sold the bitcoin.
The company delivered around 255,000 vehicles in the second quarter – significantly less than the 310,000 it delivered the first period of the year. Its quarter-million second-quarter shipments were still above the figure a year ago, when Tesla put more than 201,000 vehicles in the hands of customers.
Musk on the call touted “stronger-than-ever production” and resilience during “difficult times.”
Musk agreed to buy Twitter on April 25, but pulled out of the deal this month over apparent concerns about the proliferation of spam and bot accounts on the site.
His decision to quit coincided with a market downturn and major blows to Tesla’s value and his own wealth.
Linda Chong contributed reporting.