Elon Musk said the primary reason for the bitcoin sale was uncertainty about lockdowns due to Covid-19 in China, which have created production challenges for Tesla. File photo: Reuters.
Bitcoin fell 0.5% on news that Tesla had sold about 75% of its holdings in the digital asset as the electric car company announced second-quarter results.
The cryptocurrency later rebounded after Elon Musk, Tesla chief executive, said he was concerned about the electric car company’s “overall liquidity”.
News of the sale came as Tesla reported a higher-than-expected quarterly profit as price increases of its electric cars offset production challenges caused by Covid-19 lockdowns in China.
Total revenue fell to $16.93 billion in the second quarter from $18.76 billion a quarter earlier. Analysts were expecting revenue of $17.10 billion, according to IBES data from Refinitiv.
Tesla’s second-quarter net profit fell 32% to $2.26 billion compared with the previous quarter. Shares of the company rose 0.8% to $748.55 in New York. The stock has fallen about 30% so far this year.
Tesla sold $936 million worth of bitcoin in the second quarter, more than a year after the company bought $1.5 billion of the cryptocurrency.
Musk has been an outspoken supporter of cryptocurrencies. His statements on the future of crypto and disclosures about his ownership of digital assets often boost the price of dogecoin and bitcoin.
In February 2021, Tesla allocated $1.5 billion of its reserves to bitcoin, sending the cryptocurrency 10% higher to a then record $44,100.
On Thursday morning Hong Kong time it was trading at $23,494.57, up 1.04% over the previous day.
Musk said the primary reason for the bitcoin sale was uncertainty about lockdowns due to Covid-19 in China, which have created production challenges for the company.
“It was important for us to maximise our cash position,” Musk said.
“We are certainly open to increasing our bitcoin holdings in future, so this should not be taken as some verdict on bitcoin. It’s just that we were concerned about overall liquidity for the company.”
Musk added that Tesla did not sell any of its dogecoin, a less popular cryptocurrency.
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