Elon Musk’s electric car company Tesla announced that it sold millions in Bitcoin in the second quarter of 2022. In 2021, after announcing that it had bought the cryptocurrency, the company even held a test sale, now being the second time that the company sells the cryptocurrency.
Elon Musk is the richest man in the world and his concern about the decline of the world economy made him buy Bitcoin as a way to protect his purchasing power.
However, he ended up leading his major companies to make the same move. In this way, both Tesla and SpaceX bought bitcoin to protect themselves, at a time when the price of the digital currency was on the rise.
Tesla, as a public company listed on the US stock exchange, was required to disclose its buy position in a report to investors. When this happened, the price of the digital currency skyrocketed around the world.
The company even accepted Bitcoin as a means of payment for a short period, but claimed that the energy consumption made the currency unviable and took Tesla away from its renewable energy purpose.
After Tesla stopped accepting bitcoin, Elon Musk’s brother Kimbal Musk criticized the company’s purchase of Bitcoin, stating that the CEOs had some regret over the action.
Tesla sold 75% of his millions in Bitcoin in the second quarter of 2022, Elon Musk did not comment
The second quarter of 2022 for the cryptocurrency market was undoubtedly a milestone, with the collapse of companies in the sector and currencies that were not sustainable in their technologies, such as Terra (LUNA), for example.
However, many did not realize that Tesla was exiting its long Bitcoin position, surreptitiously selling 75% of its holdings.
The information was only revealed on Wednesday (20), when the company released its second quarter results and announced that the amount was converted to fiat currency, adding $936 million to the company’s cash.
“To end the second quarter, we converted approximately 75% of our Bitcoin purchases to fiat. Conversions in the second quarter added $936 million in cash to our balance sheet.”
According to Tesla’s public announcement, selling Bitcoin was positive to strengthen cash and thus improve operating profit.
In 2021, the amount invested by Tesla in Bitcoin was $1.5 billion, making it one of the largest publicly traded companies to have this currency as a hedge asset.
Publicly, Elon Musk has yet to comment on the company’s “sleeper sale.”
Bitcoin Price Drop After Announcement
Tesla’s exit at a time of low bitcoin prices against the dollar shows that Musk’s company comes out with losses in its operation, after just over a year learning about the technology.
This may further deter the business from accepting digital currency as a means of payment again.
However, with the majority of Tesla exiting its now known position, the market felt a 5% drop within a few hours as the price of bitcoin dropped from $24,270 to $22,806.
Namely, traders were wary of this news, which comes at a time when Bitcoin was recovering from the slump of recent months.