On Wednesday, July 20, Tesla revealed its Q2 2022 results, in which the electric vehicle manufacturer discussed its Bitcoin holdings. According to data, Tesla (NASDAQ: TSLA) sold 75% of its Bitcoin (BTC) holdings to increase its cash on hand.
The company claimed that last quarter, the widespread COVID shutdown forced them to make this difficult decision. Tesla is forced to close its Shanghai production for 22 days in April, as a result.
“The reason we sold a bunch of our bitcoin holdings was that we were uncertain as to when the COVID lockdowns would alleviate, so it was important for us to maximize our cash position. This should not be taken as some verdict on Bitcoin. It’s just that we were concerned about overall liquidity for the company” – Elon Musk, the CEO of Tesla, stated on the results call on July 20.
The company is “absolutely open to growing our Bitcoin holdings in the future,” Musk added. But he also stated that the company has not sold any of its Dogecoin (DOGE).
On July 19, Bitcoin (BTC) was gaining traction and moving in the direction of $24,000. However, the revelation that Tesla sold its Bitcoin (BTC) might have a detrimental impact on the cryptocurrency market. Bitcoin (BTC) is currently 2% down in price and not far from its 200-week moving average of $22,800.
Zach Kirkhorn, CFO of Tesla, reported that his company’s selling of Bitcoin (BTC) resulted in little profit. However, as the cryptocurrency market crashed, Tesla wiped down the value of the remaining Bitcoin (BTC) holdings, wiping out all of the earnings.
The company has an unrealized loss of $106 million as of the current Bitcoin (BTC) pricing. Tesla is now experiencing a financial shortage, so it’s unclear if the company would invest in Bitcoin (BTC) again. Additionally, this could discourage other companies from investing their excess cash in Bitcoin (BTC).