What just happened? Bitcoin's price has fallen over the last few hours following a week of mild resurgence after Tesla revealed it had sold 75% of its BTC holdings. The electric vehicle giant's financial report for the second quarter of the year shows it has been struggling in the wake of its Shanghai factory shutdown and production issues at new plants. It's also been dealing with rising inflation, a shaky economy, and cryptos' falling price.
Tesla revealed it had purchased $1.5 billion worth of Bitcoin in February last year, helping push the digital coin to a then-record high of $44,000. It sold 10% of those holdings that April, and now the company has confirmed the sale of 75% of its remaining Bitcoin, converting the digital currency into $936 million of cash.
Tesla said it still holds digital assets worth $218 million. Elon Musk spoke about the sale in an investor call, noting that the company has not sold any of its Dogecoin and that the selloff "should not be taken as some verdict on Bitcoin." The CEO explained that Tesla selling its Bitcoin was due to concerns "about overall liquidity of the company given COVID shutdowns in China." Musk also talked about the company's newest factories in Berlin and Texas, which he said are losing "billions of dollars right now."
A month after revealing its initial Bitcoin investment last year, Musk said Tesla would soon start accepting the coin as payment for Tesla products. But it was only a few weeks before he backtracked and suspended the perk due to Bitcoin's environmental impact.
Tesla saw record profit levels of $3.3 billion in the first quarter of the year. The company reported a $2.26 billion net profit yesterday, a decline of around 31.5% quarter-on-quarter. Quarterly revenue was also down, from $18.7 billion in Q1 to $16.9 billion in Q2.
The Q2 2022 figures are still an improvement compared to the same period last year when Tesla made $1.1 billion in profit and $11.9 billion in revenue, a result of more deliveries and a higher average selling price; the company has raised the price of its vehicles this year, including a $6,000-maximum hike last month.
A decline in revenue and profit was expected after Tesla previously confirmed its deliveries fell 18% due to the Covid shutdowns in China and the supply issues. The company has also cut 10% of its jobs over Musk's "super bad feeling" about the economy.
Bitcoin had experienced a slight rebound this week. BTC was hovering close to $19,000 last Tuesday (July 12) but had rallied to almost $24,200 on Wednesday. The value dropped back down to $22,700 Following Tesla's announcement.
Masthead: Ivan Marc