Electric automaker Tesla Inc. disclosed that it sold off 75% of its bitcoin holdings for fiat currency. The total value of digital assets on the company’s balance sheet after the sale was around $218 million. Elon Musk, the chief executive of Tesla, stated that they did have plans of increasing their bitcoin holdings in the future. He also said that they had not sold off any of their dogecoin holdings.
Balance sheet and cash flow
On Wednesday, Tesla announced its earnings report for the second quarter of the year. The company said that they had sold off 75% of their bitcoin purchases and the conversions had helped the company in adding cash of about $936 million to their balance sheet.
In the last quarter, the total digital assets on the company’s balance sheet had been valued at $1.26 billion, but this value has now come down to $218 million. Tesla also revealed that bitcoin impairment had seen its operating income come down for the second quarter.
According to the cash flow statement of the electric car manufacturer, it was able to generate $936 million from digital asset sales. The only other time the company had sold digital assets was back in the first quarter of 2021. At the time, the value of the sale proceeds had been about $272 million.
In early 2021, the company had purchased bitcoin for a sum of $1.5 million, but there were no other purchases made after that. Tesla has never revealed the total number of bitcoins it had bought. However, last year in July, the CEO hinted that the company may have 42,000 bitcoins.
For a brief period, Tesla had also begun to accept payments in Bitcoin, but in May 2021, it suspended this payment option because of environmental concerns. The company told the SEC in October that it could restart accepting crypto payments.
Subsequently, Musk announced that his company would only begin accepting bitcoin payments when at least 50% of clean energy would be used by miners, but it has not done so up till now. Musk explained that they had decided to sell off bitcoin holdings because they were unsure of when COVID-19 lockdowns in China would end.
Therefore, they had sold off the leading crypto in order to maximize their cash position. He said it was liquidity concerns that had driven the sale and no other reason.
As far as dogecoin is concerned, it should be noted that Tesla never bought any of the meme crypto for its balance sheet. But, the company had begun accepting DOGE payments in January for some of its merchandise.
Previously, Musk had asserted that he regarded dogecoin as more appropriate for payments, while bitcoin was better as a store of value. In a filing made with the Securities and Exchange Commission (SEC) in the US back in February, Tesla disclosed that they could increase or decrease their digital asset holdings, depending on the needs of the business and the market conditions.