Tesla has revealed it offloaed approximately 75% of its Bitcoin between April 1 and the end of June.
The sales, which took place across the second calendar quarter, added $936 million in cash to its balance sheet and were reported as a negative impairment, Tesla said in its Q2 earnings report.
Over the past year, Bitcoin prices peaked at about $67,000 in November 2021 and at the end of June 2022 were trading at just under $20,000.
Tesla in February 2021 reported it had purchased $1.5 billion worth of Bitcoin to diversify its balance sheet away from cash and maximize returns.
Then in May, Tesla chief Elon Musk decided Tesla would stop accepting Bitcoin for Tesla purchases just two months after it started accepting it. The price of Bitcoin dropped over 4% after Musk tweeted his decision.
Tesla’s balance sheet indicates it had $218 million in “digital assets, net” as of 30 June, versus approximately $1.2 billion for the past three quarters and $1.3 billion in the quarter ending June 30 2021.
Presumably most of Tesla’s remaining digital assets are Bitcoin but Musk said on an earnings call that Tesla hadn’t sold its Dogecoin. As noted by TechCrunch, Musk has said he personally owned Dogecoin but Tesla has until now not declared it does.
“We converted a majority of our Bitcoin holdings to fiat for a realized gain, offset by impairment charges on the remainder of our holdings netting a $106 million cost to the P&L included within the restructuring,” a Tesla representative said on an investor call.
Musk hopped in to explain Tesla’s decision to convert its Bitcoin holdings was not a “verdict” on Bitcoin, but was made to improve its cash position due to uncertainty over COVID-19 restrictions in China, which impacted its Shanghai Gigafactory.
“The reason we sold a bunch of our Bitcoin holdings was that uncertainty as to when the COVID lockdowns in China would alleviate, so it was important for us to maximize our cash position given the uncertainty of the COVID lockdowns in China,” Musk said.
“We are certainly open to increasing our coin holdings in the future, so this should not be taken as some verdict on Bitcoin. It’s just that we were concerned about overall liquidity given the COVID shutdowns in China. And we have not sold any of our Dogecoin.”
Tesla reported total production for Model S and X and Model 3 and Y reached 258,580 in Q2, up 25% year on year. Total deliveries reached 254,695, up 27% year on year. However, production in Q2 was also down about 17% on the previous quarter and it delivered 55,000 fewer vehicles compared to the previous quarter.
Tesla said it continued to experience manufacturing challenges due to COVID shutdowns, global supply disruptions, labor shortages and “logistics and other complications, which limited out ability to constantly run our factories at full capacity”.
Musk also addressed questions about whether the company would reduce prices after raising them across its whole line in June by 10% due to inflation, as reported by Elektrek at the time.
In short, maybe but it depends on inflation and that’s out of his control, said Musk. Because of the six-month-to-one-year wait between order and delivery, Musk said Tesla needs to “anticipate what the probable inflation rate is over that period of time”.
“When or if we see indications that the inflation rate is declining, then we would not need to increase our car prices. It’s possible there could be a slight decrease in car prices but this is fundamentally dependent on macroeconomic inflation.”
Musk reckons inflation will decline towards the end of 2022, but he said to take his prediction with a “grain of salt”.