Tesla made headlines last year when it revealed a $1.5 billion investment in Bitcoin. However, the electric vehicle maker has now sold off approximately 75% of its Bitcoin holdings according to its latest quarterly update.
This move represents a shift in strategy and reasoning from Tesla and its CEO Elon Musk when it comes to cryptocurrency. Let’s take a closer look at what happened, what it means, and things you should know.
When Did Tesla Buy Bitcoin Originally?
On February 8, 2021, Tesla announced that it had purchased $1.5 billion worth of Bitcoin. The company said this was done to gain more flexibility with cash assets and diversify its investments.
At the time, Tesla also noted that it planned to start accepting Bitcoin as payment for its electric vehicles, based on applicable laws. This would have made it the first major automaker to accept the popular cryptocurrency.
How Much Bitcoin Did Tesla Have and Sell?
Based on filings, Tesla is reported to have originally purchased around 42,902 bitcoins. The company then sold off approximately 75% of its holdings in Q2 2022, equating to about 32,177 bitcoins.
This left Tesla with roughly 10,725 bitcoins as of July 2022, worth around $315 million based on current prices.
Why Did Tesla Sell Most of Its Bitcoin?
The rationale behind Tesla selling most of its Bitcoin differs from why it originally purchased the holdings. The company said the sale was to increase its cash position and for “maximum flexibility.”
Basically, Tesla likely needed liquidity during a challenging economic period. The funds from selling its Bitcoin translated to traditional cash it can use for operations and investments.
Tesla also cited impairment charges on its Bitcoin investment as negatively impacting Q2 profitability. With crypto prices plunging, the company decided to unload most of its holdings.
Does Tesla Coin have its own cryptocurrency?
There are no reports or indications that Tesla has created or issued its own cryptocurrency token. Some key points:
- Tesla has not made any announcements about launching a Tesla Coin or any other cryptocurrency.
- Tesla’s public crypto strategy so far has solely involved purchasing Bitcoin, not creating its own coin.
- There are no Tesla Coins in circulation or available to purchase on major crypto exchanges. Any websites claiming to offer a Tesla Coin are likely fraudulent.
- Elon Musk and Tesla are focused on Bitcoin and Dogecoin more than anything proprietary. They have not discussed plans for a Tesla-branded cryptocurrency.
- While some people have speculated Tesla could eventually create its own coin, there is no solid evidence this is happening currently or in the near future.
So in summary, Tesla Coin is not a real cryptocurrency owned or supported by Tesla as of now. The company’s crypto involvement is limited to buying and selling Bitcoin so far based on public information.
Does This Mean Tesla is Anti-Crypto Now?
Not necessarily. Elon Musk actually stated on the Q2 earnings call that Tesla is “open to increasing our Bitcoin holdings in future.” So the company may buy more Bitcoin again down the road.
However, Musk also referred to crypto as a “side show to the side show.” This less enthusiastic stance indicates Tesla and Musk have cooled on crypto lately as prices dropped significantly. But they haven’t abandoned interest entirely.
Did Tesla Ever Accept Bitcoin as Payment?
Yes, briefly. In March 2021, Tesla began accepting Bitcoin as payment for its electric vehicles in certain regions. However, it halted this option just two months later in May 2021.
The company cited environmental concerns about the high energy usage required for Bitcoin mining. Processing Bitcoin transactions uses extensive computing power, which relies heavily on electricity often generated from fossil fuels.
Tesla said it will revisit accepting Bitcoin again once mining transitions to more renewable energy sources.
How Many Cars Did Tesla Sell for Bitcoin?
Tesla has not revealed if any vehicles were actually purchased using its short-lived Bitcoin payment option. It’s likely the number was very low if any.
How Has Tesla’s Bitcoin Investment Performed Overall?
It’s unclear at exactly what price Tesla accumulated its original Bitcoin position of around 42,902 BTC. However, Bitcoin surged in value after Tesla announced its purchase.
If Tesla sold the majority of its Bitcoin in Q2 2022 at an average price of around $20,000, it would have roughly tripled its investment in about 1.5 years. A $1.5 billion purchase price originally would mean Tesla generated over $2 billion from its Bitcoin dealings.
This return beats most asset classes over that timeframe. However, it could have been even higher if Tesla held its full Bitcoin position longer term.
What Other Companies Own Large Bitcoin Holdings?
Tesla isn’t the only public company exposed to Bitcoin. Some other large corporate holders include:
- MicroStrategy – Over 152,000 BTC worth around $4.5 billion
- Galaxy Digital Holdings – Around 8,100 BTC worth approximately $240 million
- Block (Square) – Nearly 8,000 BTC worth around $236 million
Additionally, crypto exchange Coinbase holds around 9,000 BTC valued around $265 million. Bitcoin mining firms like Marathon Digital and Riot Blockchain also have substantial holdings.
Did Tesla Purchase Other Cryptocurrencies?
There are no indications that Tesla invested in any other cryptocurrencies besides Bitcoin. The company solely disclosed its Bitcoin purchase.
Tesla and Musk have not revealed any holdings of popular altcoins like Ethereum, Dogecoin, Solana, Cardano, Polkadot, etc. However, Musk does occasionally tweet about Dogecoin and offer his opinions on the memecoin.
What Does This News Mean for Bitcoin?
Tesla selling 75% of its Bitcoin is viewed negatively by some crypto investors. It signals decreased institutional interest and optimism in Bitcoin, especially from major thought leaders like Elon Musk.
However, others argue the sale was more a reflection of Tesla’s balance sheet needs rather than its long-term view on Bitcoin. The company even reiterated it may buy Bitcoin again in the future.
Overall, the impact on Bitcoin itself is likely minimal beyond some short-term price volatility. But the news contributes to the recent negative sentiment around crypto as values plummet.
Key Takeaways and Conclusions
- Tesla purchased $1.5 billion in Bitcoin in February 2021 and sold 75% in Q2 2022
- Selling was likely to boost cash reserves; doesn’t mean Tesla has abandonded crypto interest entirely
- Tesla briefly accepted Bitcoin for electric vehicle purchases in 2021 but halted due to energy usage concerns
- It’s unknown exactly at what price Tesla acquired its original Bitcoin position
- Tesla likely generated solid returns on its Bitcoin investment over 1.5 years
- News contributes to recent negative outlook but minimal direct impact on Bitcoin fundamentals
What is Tesla’s current Bitcoin position?
Based on its Q2 update, Tesla now holds around 10,725 bitcoins worth about $315 million.
Why did Tesla sell most of its Bitcoin?
Tesla said it sold to increase cash on hand. Likely for operating needs and flexibility amid market uncertainty.
Did Tesla lose money on its Bitcoin investment?
Unclear, but unlikely. Tesla probably roughly tripled its money over 1.5 years based on Bitcoin’s price history.
Is Tesla completely moving away from crypto?
No, Elon Musk said Tesla remains open to buying Bitcoin again in the future. The sale was more about short-term needs.
When did Tesla accept Bitcoin as payment?
For a brief period in March-May 2021. It halted due to environmental impact of Bitcoin mining.
What other major companies own Bitcoin?
MicroStrategy, Galaxy Digital, Block (Square), and Coinbase hold substantial Bitcoin positions on their balance sheets.
Did Tesla invest in cryptocurrencies besides Bitcoin?
No, Tesla has not disclosed any holdings of other cryptos like Ethereum, Dogecoin, etc. Only its Bitcoin purchase.
Does this news impact the long-term Bitcoin outlook?
Marginally. Some see it as reduced institutional enthusiasm, but minimal effect on Bitcoin fundamentals. Price volatility is possible short-term.