Tesla has sold 75 percent of its bitcoins

In February 2021, Tesla bought $1.5 billion worth of bitcoin. Subsequently, in April of that year, it sold 10 percent for $272 million. $. 15 month later as part of its Q2 2022 quarterly earnings report, it revealed that it sold another 75 percent of its remaining reserves for $936 million. $.

They have sold 77.5% of the bitcoin they originally bought. The cost of buying this portion was $1.16 billion and the proceeds were $1.2 billion. Although they lost money on the three-quarters they sold recently, last year’s sale still keeps their overall realized profit in the black for now. But if you factor in inflation, they are more likely to be in a slight loss position.

The value of the remaining bitcoin they own is 218 million. $. Its potential sale would mean that the purchase of bitcoin would prove to be a loss for Tesla. A more strategic move would be to wait for the price to rise to at least above $40,000. 

Elon Musk has correctly stated that bitcoin was one of the factors that hurt their profitability in the last quarter. CFO Zachary Kirkhorn also said that they are open to increasing their position in bitcoin again in the future.

So why did the sale happen at a time of falling prices? During the earnings call, Tesla representatives cited the reason as an effort to maximize cash positions in a time of uncertainty related to Chinese lockdowns. In short they want to be more liquid. 

Due to the Chinese lockdown, they had to temporarily close the Shanghai factory at the beginning of the quarter, which complicated deliveries to Europe and North America. Supply chain issues are also hurting factories in Berlin and Texas. Tesla needs large quantities of semiconductors for its products, the supply of which has been cut short since the start of the pandemic.To ensure to have more liquidity, they also announced that they would lay off 10% of their workforce.

In relation to bitcoin, the sword of Damocles still hangs over Tesla’s relation to ESG. One of their main sources of revenue is the sale of carbon credits. 

Overall, however, Tesla’s net profit was $2.26 billion. That’s down 32% from the first quarter.