Tesla, the world’s most capitalised electric vehicle manufacturer, led by the world’s richest man and former Bitcoin supporter, Elon Musk, announced in its second quarter 2022 report that it sold the majority of its Bitcoin (BTC) holdings in the second quarter.
According to its financial report, “As of the end of Q2, we had converted approximately 75% of our Bitcoin purchases into fiat currency.” Conversions added $936 million to our balance sheet in the second quarter”.
Tesla’s net Bitcoin holdings were relatively stable for three consecutive quarters, according to financial statements. Tesla had $1.261 billion in digital assets on its books at the end of March. Following the liquidation, the firm now has a $218 million exposure to digital assets.
This is not the first time Tesla has sold a portion of its Bitcoin holdings since the asset class was added to its balance sheet. In March 2021, the EVM company sold a portion of its BTC reserves, earning a net profit of $128 million.
Elon Musk, Tesla’s CEO at the time, explained that the sale, which amounted to 10% of Tesla’s holdings, was made to prove the liquidity of Bitcoin as an alternative to holding cash on the balance sheet.
Tesla became one of the largest corporate holders of Bitcoin just two months before the first sale, in January 2021, when it purchased $1.5 billion in BTC. The purchase was disclosed in a filing with the Securities and Exchange Commission in February.
Tesla began accepting BTC as payment for its products at the time, but this was quickly discontinued, with Elon Musk citing Bitcoin’s energy usage as the reason for the discontinuation.
In the second quarter of 2022, the EVM recorded total sales of $16.93 billion, a 9.71 per cent decrease from the first quarter of the year. Tesla’s revenue has increased by approximately 42 per cent year on year.
Tesla reported adjusted per-share earnings of $2.27 on revenues of $16.93 billion in its fiscal second quarter. Automotive gross margins fell in the first quarter and year ago due to inflation and increased competition for electric vehicle components like battery cells.