- Tesla sold 75 percent of its Bitcoin holdings, valued at around $936 million.
- Company changed majority of Bitcoin to fiat currency for a realised gain, resulting in a $106 million charge.
- China’s “zero COVID policy” is being tested once more, sparking fresh economic headwinds.
Elon Musk, CEO of Tesla, detailed during today’s results call why the business sold 75 percent of its Bitcoin holdings, valued at around $936 million, as reported in its Q2 earnings report.
“The reason we sold a bunch of our Bitcoin holdings was that we were uncertain when the COVID lockdowns in China would alleviate,” Musk said on the call. Given the unpredictability of COVID lockdowns in China, it was crucial for us to optimise our cash position.
Despite the fact that China had loosened COVID restrictions in major cities at the end of May, an increase in instances in Beijing and other critical regions caused the government to reinstate restrictions a few weeks later. In Shanghai, mass testing and lockdowns were performed earlier this month.
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As a result, China’s “zero COVID policy” is being tested once more, sparking fresh concerns of intensifying economic headwinds. Reuters reported that industrial production and consumer expenditure in the second quarter of the world’s second-largest economy fell substantially from the first quarter.
On the call, the company indicated that it changed the majority of its Bitcoin holdings to fiat currency for a realised gain, resulting in a $106 million charge to the P&L (profit and loss) associated to targeted employee reductions.
Musk stated that Tesla is open to growing its coin holdings in the future despite the sell-off.
“This should not be taken as some verdict on Bitcoin,” he said, making sure to add that Tesla has not sold any of its Dogecoin.
Musk stated in a subsequent question-and-answer session that cryptocurrency is “a sideshow to the sideshow” and an afterthought for Tesla.
Elon Musk explained that Tesla’s main goal is to “accelerate the advent of sustainable energy.”
“We’re neither here nor there on cryptocurrency,” he said.
