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Tesla Sells $936 Million in Bitcoin, Keeping Dogecoin Reserves

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Elon Musk is a crypto icon. This is largely due to its association with dogecoin meme token For months last year, Musk was known as the “father of the Great Danes,” but that’s also because Tesla is one of the best-known institutional investors in bitcoin. At least that’s how it was.

In Tesla’s latest earnings report released on Wednesday, the company said it had sold most of its bitcoin: “We have converted approximately 75% of our bitcoin purchases into fiat currency. Q2 conversions added $936 million in cash to our balance sheet.”

AT follow-up call about incomeMusk explained that the sell-off was due to ongoing COVID lockdowns in China, the world’s largest auto market and also where many Tesla vehicles are made.

“The reason we sold some of our bitcoin holdings was because we didn’t know when the lockdown would ease in China, so it was important for us to maximize our cash position given the uncertainty,” Musk said. “We are certainly open to increasing our bitcoin holdings in the future, so this should not be taken as a judgment on bitcoin.”

“We haven’t sold any of our dogecoin, we still have our dogecoin,” Musk added.

According to Wednesday’s earnings report, Tesla has $621 million in cash, meaning cash flow would be negative were it not for the $936 million bitcoin sale.

Tesla bought $1.5 billion worth of bitcoin disclosed in SEC filing in February 2021, contributed to the market euphoria about the cryptocurrency, which led to a sharp jump in the price of bitcoin from about $20,000 in December 2020 to $60,000 in March 2021. Tesla’s bitcoin reserves peaked at $2 billion at one point. Tesla originally bought bitcoin to “give us more flexibility to further diversify and maximize returns on our cash,” the company said in a 2021 SEC filing.

Largely thanks to Musk’s encouraging tweets, dogecoin collect 70 cents last May and briefly reached a market capitalization of $70 billion. It is not known how much dogecoin Tesla owns, although the company’s earnings report says it owns $218 million worth of digital assets. Most of this is likely to be Tesla’s remaining bitcoin.

Since then, cryptocurrency prices have plummeted from their 2021 highs. Bitcoin has fallen 48% since the beginning of the year, while Ethereum, the second largest cryptocurrency, fell 57% since Jan 1. Dogecoin is currently worth just above 7 cents.

While Musk is supported by the bitcoin and crypto communities, he has made statements both touting and criticizing the technology. “Bitcoin is almost as much bullshit as fiat money. The key word is “almost,” he said in February. “However, when a fiat currency has a negative real interest rate, only a fool would not look for something else.”

After announcing that Tesla would accept bitcoin as payment for its electric vehicles, Musk backed out and said he would suspend such payments for environmental reasons, given the amount of fossil fuel-derived energy it takes to produce it. “Cryptocurrency is a good idea on many levels and we believe it has a promising future, but it can’t cost the environment dearly.” he tweeted.

Tesla did not respond to a request for additional comment.

Correction: This story initially misrepresented the amount of money Tesla received for selling the cryptocurrency. The deal resulted in the company receiving $936 million in cash.


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