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HomeNewsElon Musk Tesla sells 75% of its Bitcoin holdings as profits fall

Elon Musk Tesla sells 75% of its Bitcoin holdings as profits fall

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Tesla has sold 75% of its Bitcoin portfolio as profits fell in the second quarter

The electric vehicle manufacturer announced in its Q2 earnings report that it converted the Bitcoin to $936 million (£782 million) in cash, bringing its total digital asset holdings to $218 million (£182.4 million).

Profits fell to $2.3 billion (£1.9 billion) from a record $3.3 billion (£2.8 billion) in the first quarter as the EV giant dealt with production issues and the closure of its Shanghai factory. Tesla did, however, report a record month of vehicle production.

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Tesla announced on 8 February 2021 that it had purchased $1.5 billion in Bitcoin at a price of more than $46,000 (£38,488), more than double its current price of less than $23,000 (£19,244), when interest in the crypto market was booming during the pandemic.

Bitcoin fell 3.26 percent after Tesla announced the Bitcoin sale, trading at $22,980 (£19,229) today. The crypto market has seen a sharp drop this year, with the price of Bitcoin falling by about 50% so far this year to trade at.

Tesla sells 75% of its Bitcoin holdings

Tesla has sold the majority of its cryptocurrency holdings after investing $1.5 billion (£1.09 billion) in Bitcoin in February 2021.

Since then, the value of Bitcoin has plummeted, falling by more than half this year. The electric vehicle manufacturer revealed that it sold $936 million (£782 million) in Bitcoin in the second quarter. Tesla CEO Elon Musk stated that the sale was motivated by concerns about his company’s “overall liquidity.”

Musk stated on Tesla’s earnings call that the primary reason for the sale was uncertainty about lockdowns in China caused by Covid-19, which has created production challenges for the company. ‘It was critical that we maximise our cash position,’ Musk said.

‘We are certainly open to increasing our Bitcoin holdings in the future, so this should not be interpreted as a judgement on Bitcoin.’ It’s just that we were concerned about the company’s overall liquidity.’

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For years, Musk has been an outspoken supporter of cryptocurrencies. His frequent statements about the future of crypto, as well as disclosures about his ownership of digital assets, frequently boost the price of digital assets such as Dogecoin and Bitcoin.

Following the news that Tesla had rid itself of Bitcoin, the digital currency recovered after a brief dip. After falling as much as 0.5 percent to $23,268.92 on the news, the world’s largest cryptocurrency was last up 1.04 percent at $23,494.57.

Musk also stated that Tesla did not sell any of its Dogecoin, the meme-based cryptocurrency he has promoted. Tesla accepted Bitcoin for less than two months before discontinuing it in May 2021.

Musk has stated that the company may resume accepting Bitcoin after conducting research on the amount of renewable energy required to mine the currency.

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