Tesla, led by Elon Musk, confirmed that it bought about $ 1.5 billion in bitcoins in January and hopes to begin accepting it as payment in the future.
Artur Widak NurPhoto | Getty Images
Earlier last year, Tesla invested $ 1.5 billion in bitcoins, based on what the electric car maker called the “long-term potential” of digital currency. The company has already sold three-quarters of its stakes.
“By the end of the second quarter, we had converted approximately 75% of our Bitcoin purchases into fiat currency,” Tesla said Wednesday in its second quarter earnings statement. The company said those sales added $ 936 million in cash to its balance sheet.
It’s a quick retreat for Tesla and CEO Elon Musk, who was a major proponent of cryptography during the early stages of last year, tweeting frequently about various digital currencies. The price of bitcoin has lost half its value in the last four months during what has been dubbed a “cryptographic winter”.
For Tesla, the fair market value of its holdings in bitcoins reached $ 2.48 billion in the first quarter of 2021 and ended the year at about $ 2 billion. The company did not say at what price it sold or provide the size of its deterioration, but bitcoin started in the second quarter at about $ 46,000 and ended below $ 19,000.
Barclays analyst Brian Johnson estimated earlier this week that Tesla would see a $ 460 million bitcoin-related deterioration given the sale.
“The reason we sold a lot of our holdings in bitcoins was that we weren’t sure when they would ease Covid’s blockades in China, so it was important for us to maximize our cash position.” , Musk said in a earnings call Wednesday. “This should not be taken as a verdict on bitcoin,” he said, adding that Tesla is open to increasing its cryptocurrency holdings in the future.
However, when asked about the potential of bitcoin as inflationary hedging in the earnings call, Musk said Tesla’s main goal is to accelerate the transition to sustainable energy and called bitcoin “a side show. to a side show “.
In the first quarter of 2021, when Tesla raised bitcoin, the company said the decision was a matter of being more flexible, diversifying and getting returns from its cash reserves. The company quickly sold 10% as the currency rose, contributing $ 101 million in profits during the period.
Kirkhorn said at the time that the company’s intention was to “preserve what we have in the long run and continue to accumulate Bitcoin from our customers’ transactions as they buy vehicles.”
In May last year, Musk said Tesla would stop accepting bitcoins for car purchases because of the environmental impact of mining, but added that the company “will not sell any bitcoin.” A week later, he tweeted emojis indicating that the company has “diamond hands” when it comes to investing in bitcoins and credited “our currency master.”
Many things can change in a year.
– CNBC’s Lora Kolodny contributed to this report.
MIR: We’re more concerned about Tesla’s quarterly results, this time, says Garrett Nelson of CFRA