Tesla Sold 75% of its Bitcoin Holdings as Profits Slump

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Updated: Jul 21, 2022, 16:01 GMT+00:00

Tesla has dumped $936 million worth of Bitcoin from its balance sheet following a $1.5 billion BTC buying spree last year.

Key Insights:

Tesla sold $936 million worth of Bitcoin in the second quarter of this year.
The company’s remaining digital asset holdings amount to $218 million.
This comes after Tesla invested $1.5 billion in Bitcoin last year.

For a company that once heralded the value of Bitcoin, it comes as a surprise to many that electric car manufacturer Tesla has sold 75% of its Bitcoin (BTC) holdings.

More specifically, the clean energy company most well-known for selling electric cars, vehicle powertrain components and battery products, has revealed in its new financial earnings report that it sold $936 million worth of Bitcoin in the second quarter of this year.

BTC Holdings

According to the company’s new financial statements, Tesla’s net Bitcoin holdings were relatively stable for three consecutive quarters but following the sale, the company now has just $218 million in digital asset exposure. This is a sharp drop from March’s $1.261 billion figure.

Early last year, Tesla disclosed in a filing with the United States Securities and Exchange Commission (SEC) that the company had used some of its available cash to invest $1.5 billion in Bitcoin.

In April 2021, Tesla reported a record quarterly profit and sold 10% of its Bitcoin stake, netting $128 million on those sales. At the time, CEO Elon Musk explained that the sale was a way to “prove the liquidity of Bitcoin” as an alternative to holding cash on the company’s balance sheet.

Previously, the firm had reversed its decision to accept Bitcoin for car purchases less than a few months after it began accepting the world’s largest cryptocurrency for payment. Musk confirmed that the plans were scrapped due to concerns about Bitcoin’s energy usage.

Profits

For its fiscal second quarter, Tesla reported a significant drop in profits after the electric car company struggled to meet demand due to a shutdown of its Shanghai Gigafactory and production challenges at new plants. The company has experienced manufacturing slowdowns due to supply chain issues which limited its ability to run factories at full capacity.

Indeed, the company has not been immune to global supply chain issues and with a drop in delivery numbers, Tesla only managed to sell 254,000 vehicles this quarter, down 18% from the previous quarter.

In fact, second-quarter profits fell 32% from record levels in the first quarter despite the company reporting a $2.26 billion net profit.

Tesla also reported adjusted per share earnings of $2.27 on revenues of $16.93 billion. Automotive gross margins were down compared with the first quarter, which has been exacerbated by rising inflation and supply chain issues related to electric vehicle components such as battery cells.

About the Author

Mohadesa Najumiauthor

Mohadesa Najumi is a British writer who has worked within crypto, forex, financial technology, and the stock market industry. Mohadesa received her MSc in Political Science and International Relations at the University of Amsterdam.