Electric automaker Tesla's latest quarterly report has revealed that the company has sold three quarters of its Bitcoin holdings due to global economic headwinds, lockdowns in China, and the recent crypto market crash.
In a shareholder letter sent out on 20 June, the company announced that it had converted approximately 75 percent of its stake in Bitcoin into fiat currency. The sell-off amounted to $936 million.
The company, headed by CEO Elon Musk, also broke its streak of profit growth by making $2.26 billion in the second quarter, 30 percent less than its Q1 profits. The current figures are still an improvement from Q2 2021, when the company reported $1.1 billion in profit.
Liquidity, Not a Verdict on Bitcoin
In a Q&A session with investors, CEO Elon Musk talked about the Bitcoin sale, saying that it "should not be taken as some verdict on Bitcoin." Musk seems to be still hopeful about cryptocurrencies.
He also added that the reason Tesla sold its bitcoin holdings was due to concerns about liquidity owing to the lockdown in China, which has stopped production in Tesla's Shanghai plant.
The pandemic situation in China is also creating issues for the company by increasing the cost of raw materials and causing supply chain issues.
Tesla mentioned that "Bitcoin impairment" was also one of the difficulties it faced, referring to the recent crypto market downturn that was fueled partly by Celsius Network's decision to freeze withdrawals.
The company has still witnessed an increase in revenue this year due to more sales and price hikes. To offset the low production in China, Tesla is trying to ramp up production at its sites in Berlin and Texas.
Tesla and Crypto
In February 2021, Tesla made headlines worldwide when it made a $1.5 million investment in Bitcoin.
It also announced that they would be accepting Bitcoin as payment. This decision was infamously overturned by the company less than two months later, claiming concerns over the environmental effects of Bitcoin mining.
Tesla's digital assets were valued at $1.2 billion in previous quarters. After the sell-off, this figure now stands at $218 million, according to the company's reports.
Last year, Musk said that he does not "pump and dump" since his goal is not to get the price of cryptocurrencies high and then sell at a profit. "I would like to see Bitcoin succeed," he said.
Elon Musk was also a driving force behind the adoption of Dogecoin, a cryptocurrency that was initially created as a joke. His tweets about cryptocurrencies often led to market changes. Musk also mentioned in the recent investor call that Tesla has not sold any of its Dogecoin.