Elon Musk Sells Tesla’s Bitcoin

Tesla would buy Bitcoin

Elon Musk made headlines in February 2021 when he stated on Twitter (NYSE: TWTR) that his electric car firm, Tesla (NASDAQ: TSLA), would buy Bitcoin (CRYPTO: BTC) as an alternative to currency. The announcement caused a significant amount of excitement. Many people, at the time, considered the purchase to be one of the most important events in the relatively brief history of bitcoin. The acquisition of Bitcoin for $1.5 billion sparked a buying frenzy, which drove up the price of Bitcoin by roughly 20 percent in a span of less than 24 hours.

In January of 2021, Tesla invested $1.5 billion in bitcoin, and by March of that same year, the company began accepting cryptocurrency payments for the purchase of its vehicles. Because of worries with the usage of fossil fuels in cryptocurrency mining, the company ceased accepting bitcoin in May of that year and has not resumed the practice.

A number of price increases on Tesla’s best-selling vehicles help overcome issues with production. According to the company’s earnings report that released on Wednesday. As a result, Tesla was able to record an increase in quarterly profit.

Elon Musk’s promises that was not kept


Elon Musk took to Twitter a year ago to explain Tesla’s stance on the cryptocurrency known as Bitcoin. “Tesla will not be participating in the sale of any bitcoins.” That comes across as somewhat forceful.

However, Elon Musk’s words that come from the lips of the richest person in the world ought to be taken with not just a pinch but rather a shovelful of salt.

After a year had passed since that Tweet, it is now common knowledge that Tesla liquidated the majority of their Bitcoin holdings.

You might be starting to see a trend here, right?

Elon’s proclamations do not always come to pass, whether they involve the promise of driverless technology or the acquisition of social media companies.

It would appear that this has not been detrimental to his professional business career to this yet.

However, this serves as another another reminder that his statements. Which have the ability to impact markets, are not written in stone.

The move is simply another piece of unfavorable information for Bitcoin and cryptocurrency in general. Musk is a supporter of cryptocurrency and has contributed to the rise in popularity of cryptocurrencies such as Bitcoin and Dogecoin.

Mr. Musk states that this wasn’t a judgment on Bitcoin, but rather on the necessity of currency, and he explain his reasoning.

On the other hand, he refers to cryptocurrency as a “side show to the side show.” Not exactly the most enthusiastic recommendation.

Quarterly Announcement

As part of its routine quarterly announcement, Tesla provided details regarding the sale of its interests. Bitcoin mention as one of the causes that contributes to the company’s decrease profitability.

However, the firm announce a profit for the three months that ends at the end of June that was better than what was projected. This was due to price hikes on the company’s best-selling automobiles. This aids in overcoming issues such as Chinese lockdowns..

In addition to that, it stated that the second half of the year will be “record-breaking.”

Following the removal of restrictions on Covid-19, Tesla reported that production at its manufacturing in China reached a monthly record high.

Elon Musk also stated that production at the company’s more recent operations in Germany and the United States grew.

He had referred to the locations in Berlin and Austin, Texas, as “massive money furnaces” in the past.

The price of Tesla shares has dropped by over 40 percent so far this year.

Elon real reason behind the decision to sell

ELON

Despite the fact that the announcement of the sale creates by Tesla a week ago. The business actually sold approximately 31,500 Bitcoin at a price of approximately $30,000 some time during the month of May. Due to the sale, Tesla was able to get the cash it so desperately. It is necessary to avoid the worst of the losses that occurs in July, when Bitcoin falls below $19,000.

If Tesla had not sold when it did, the business would have sustained a loss of approximately $346 million. In which is equivalent to $11,000 per Bitcoin. By selling their inventory at $30,000 rather than about $19,000, the company was only able to register a loss of $106 million. This was probably due to some fortunate timing as well as a little bit of luck

After briefly holding the position of largest electric car manufacturer in the world in July of this year, Tesla has since fallen to the number two spot. Because of the lockdowns, several of the company’s major plants. Set in places such as Shanghai, force to close for more than a month this spring. Because of this kind of impact to production, Tesla force to discover other ways to make money.

Without Bitcoin Sales

It is highly possible that the most recent earnings report would have been one of the worst. It has had in a considerable amount of time if the Bitcoin had not been sold. During periods of normal manufacturing, Tesla typically sells around 60,000 automobiles every single month in China. In spite of the fact that June saw a record number of automobiles sold. Overall sales for the second quarter were approximately 70,000 units lower than those for the first quarter.

Through the sale of its Bitcoin, Tesla was able to increase its cash reserves. And soften the blow of the plants in China that hit by lockdowns. In the end, it is possible that this decision was the best one to make. In order to ensure that any further consequences from the lockdowns were modest. And would not hurt Tesla’s bottom line for the second quarter. It will appear that the move appears in an effort to minimize the impact of the negative news. It will have unavoidably include in Tesla’s earnings report. Even though Tesla’s manufacturing figures dropped. The company was able to make up for it by adding more cash to its balance sheets. Although it is not always a good idea to sell an asset for reasons. That are only relevant in the short term, it appears to have been successful in this instance .Especially when considering that after the earnings report, Tesla’s stock increased by almost 10 percent.

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