Tesla, which made waves the previous year when it stated that it had invested the majority in Bitcoins, has now sold off its cryptocurrency holdings.
The electric car firm has sold off 75% of its bitcoin holdings which were worth 2 billion USD at the end of 2021.
The main reason behind the huge decision of Tesla is the extreme volatility of the cryptocurrency. The value of the cryptocurrency has decreased, falling more than 50% this year. Tesla has declared that it received traditional currency worth $936 million by selling bitcoins.
Tesla’s CEO Elon Musk has been among the most high-profile investor of cryptocurrency, and he was regarded as the champion in the field of trading. His pronouncements on social media were used to drive significant trading activity among the investors.
Tesla’s investment of 1.5 Billion USD in February 2021 has soared the demand for cryptocurrency. However, its valuation has been continuously decreasing since last year because of the extreme volatility. Currently, the valuation of Bitcoin has reached a substantial mark of 70,000 USD.
One Bitcoin now trades for less than 25000 USD.
Previously, Tesla has restricted the use of bitcoins as a payment option for selling off its cars as the manufacture of bitcoins imposed a threat on the climate because of the intensive mining. During that time Elon Musk mentioned that the company would not offload its bitcoin investments.
But, Elon Musk’s decision to take steps contrary to the statement shows that Musk has broken another promise.
Last year, Elon Musk took it to his Twitter handle, where he revealed his position regarding the bitcoin. He has emphasized that Tesla will not sell any Bitcoin. It was the most significant decision taken by the world’s richest person, which influenced many netizens to invest in bitcoins.
A trend is observed from the following incident. This implies that most of the pronouncements shared by Elon Musk on his Twitter handle do not always come to pass.
The trend was relevant in the case of buying social media companies and promising driverless technology. But, the changing decisions have not proved to be a bane either for his business.
It can only be concluded that his statements are not set in stone. The decision came out to be a loss for Bitcoin and crypto generally. Musk was a representative of the cryptocurrency and his backing out on bitcoin investments may prove to be a loss for the cryptocurrency brands like Dogecoin and bitcoin.
Musk has further remarked that the selling off the cryptocurrency can not be reasoned out to the reflection on Bitcoin, and it was because of the company’s need for cash.
Tesla even shared the sale of the holdings as part of its regular quarterly update. He considered Bitcoin as the main factor affecting the company’s profitability.
In addition, the electric car firm has further recorded higher profits than expected to overcome the lack of profitability in the previous quarter as the prices increased for the best-selling cars helped overcome the offset challenges, including the lockdowns in China.
The company even anticipates achieving a record-breaking half in the second part of the year. The company has further added that the setting up of newer factories in Germany and the US has increased the output of electric cars.
And he further remarked on the sites in Berlin and Austin, Texas, as gigantic money furnaces.
Why has Tesla sold off its investment in Bitcoin?
Q2 2022 Financial Report has shown how Tesla is coping with the inflation and total economic shutdown combined with a decrease in the price of Cryptocurrencies. In the letter to the investors, Tesla revealed to the company that it has sold 75% of its bitcoin holdings. This has added an amount of 936 million dollars to the balance sheet. Tesla started investing in Bitcoin the previous march and abruptly reversed the pronouncement in May just 49 days later.
During an investor call, Elon Musk opened up about the abrupt decision of trading off the bitcoin. He has made clear that he has not sold off the stocks of dogecoin and said that Bitcoin was mainly sold because the company was concerned with the liquidity of
The company because of the covid shutdowns in China. He regarded cryptocurrency as the sideshow to the sideshow.
Reports depict that the electric cars firm has faced many new competitors by the end of the day. The company has declared that it made around 2.26 billion USD in profit this quarter which marked a 31% decline from the profit made in the previous quarter when the company achieved a gain of 3.3 billion USD. The profit was earned at 16.9 billion in revenue which has also declined from Q1 when the company declared that it had brought 18.7 billion USD.
Culturally, it has been a turbulent quarter at Tesla. In late April, Elon Musk was compiled to sell off billions of dollars worth of stock in the company to help pay for the Twitter mess up. Musk further predicted the company was coming to a massive doom when he had to announce hiring freezes and layoffs in the company. The sack of employees from the team has affected the autopilot team and Tesla has been blamed for violating the labor law after the company had to let go of 500 gigafactory workers. The company has also lost the head of its AI this month.
However, the month was not surrounded by bad news. Tesla declared a partnership with Uber and Hertz, where qualified drivers are allowed to rent electric vehicles to ride passengers in. A report released by Uber in June reveals that the partnership is going well among the companies.