Tesla, which just over a year ago rocked the financial world by making a major investment in bitcoin (BTC), has backtracked and sold 75% of its holding.
Tesla dumping weakened BTC recovery
The news also weakened bitcoin’s recovery, sliding under the $23,000 mark, according to CoinGecko. However, soon after, it began to regain momentum and is trading close to the crucial level at press time.
Musk said he is not against the idea of re-accumulating BTC. Musk was quoted by Reuters as saying: “It was important for us to maximize our cash position… We are certainly open to increasing our bitcoin holdings in the future, so this should not be taken as some verdict on bitcoin. It’s just that we were concerned about overall liquidity for the company.”
On Tesla’s earnings call, the company reportedly emphasized that the BTC sale in exchange for fiat currency was on the back of COVID-19 lockdowns in China, which created uncertainty for the car producer.
“It’s just that we were concerned about overall liquidity for the company given COVID shutdowns in China,” Tesla CFO Zachary Kirkhorn said.
Has Tesla’s crypto bet failed?
Be[In]Crypto reported earlier this month that Tesla’s investment in bitcoin faced a decline of $440 million as the market began to slide earlier this year.
While bitcoin started April trading around $45,000, it spiraled down to $20,000 by the end of June. Tesla’s selling price was not disclosed.
Reports suggest that Tesla seems to have lost around $150 million on its crypto bet, with the company noting that the value of its remaining “digital assets” is $218 million.
Tesla suspended bitcoin payments in May 2021 on the back of environmental concerns associated with Bitcoin mining, shortly after allowing the coin as an option.