Tesla sells 75% of its Bitcoin holdings to add $936 million to balance sheet

Tesla, the world’s most capitalized electric vehicle maker, ran by the world’s richest man and former Bitcoin fan, Elon Musk, announced in its second quarter 2022 report that it sold most of its Bitcoin (BTC) holdings in the second quarter of the year.

Its financial report reads that “As of the end of Q2, we have converted approximately 75% of our Bitcoin purchases into fiat currency. Conversions in Q2 added $936M of cash to our balance sheet.”

According to the financial statements, Tesla’s net Bitcoin holdings were relatively stable for three consecutive quarters. By the end of March, Tesla had $1.261 billion worth of digital assets on its books. Following the liquidation, the firm now has $218 million in digital asset exposure.

What you should know

  • This is not the first time Tesla is selling a portion of its Bitcoin holdings since it began adding the asset class to its balance sheet. The EVM company sold a portion of its BTC reserves in March 2021, realizing a net profit of $128 million.
  • At the time, CEO Elon Musk explained that the sale, which amounted to 10% of Tesla’s holdings, was to “prove liquidity of Bitcoin as an alternative to holding cash on balance sheet.”
  • Just two months prior to the first sale, in January 2021, Tesla became one of the largest corporate holders of Bitcoin after it acquired $1.5 billion worth of BTC. The purchase was disclosed in a February filing with the United States Securities and Exchange Commission.
  • At the time, Tesla also began to accept BTC as payments for its products but that was immediately stopped with Elon Musk citing Bitcoin’s energy usage as the reason for the discontinuation.
  • The EVM recorded a total sale of $16.93 billion in the second quarter of 2022, down 9.71% when compared to the first quarter of the year. When compared YoY, Tesla’s revenue is up approximately 42%

For its fiscal second quarter, Tesla reported adjusted per-share earnings of $2.27 on revenues of $16.93 billion. Automotive gross margins were down compared with the first quarter and a year ago due to inflation and growing competition for electric vehicle components, such as battery cells.

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