Tesla sells 75% of its bitcoin assets worth $936 million in Q2

Electric car maker Tesla sold $936 million worth of bitcoin in the second quarter , or 75 percent of its bitcoin holdings, the electric car maker said in an earnings report on Wednesday. The company held just $218 million in bitcoin at the end of the second quarter, down from $1.26 billion in the previous three quarters.


“As of the end of the second quarter, Tesla had converted approximately 75% of the Bitcoin purchases into fiat currency, adding $936 million in cash to our balance sheet,” the earnings report reads.

The company held about 42,000 bitcoins during the quarter, so if it sold 75% of them for $936 million, that would be equivalent to an average selling price of about $29,000 per bitcoin. By the end of the second quarter, bitcoin was trading at around $18,700, meaning Tesla avoided a huge impairment charge on its bitcoin holdings by selling bitcoin earlier in the quarter.

According to a report by Barclays analyst Brian Johnson, Tesla’s large bitcoin holdings could face a $460 million impairment loss, but that figure is premised on Tesla not selling or adding to its bitcoin in the second quarter position. Under the accounting rules for digital assets, companies must report impairment losses if the asset’s price falls within a quarter, but if the price rises, it won’t be reported as a gain on the balance sheet unless the asset is sold. By selling bitcoin, Tesla reduces the impairment charges for holding bitcoin.

The crypto market reacted immediately to the news. Bitcoin topped $24,000 on Wednesday and fell 2.5% to $23,078.18 immediately after the close at 4 p.m. ET, while ether , the second-largest cryptocurrency by market capitalization, also fell 3%.

Tesla’s second-quarter earnings beat analysts’ expectations, with revenue of $16.9 billion, compared with analysts’ expectations of $16.88 billion. “While we faced some challenges, including limited production and shutdowns in Shanghai for much of the quarter, we achieved an industry-best operating margin of 14.6% and positive free cash flow of $621 million,” the company said in a statement. And ended the quarter with the highest month of vehicle production in our history.”

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As previously reported by BitTweet, Tesla announced in February last year that it had purchased $1.5 billion worth of bitcoin, a move that sent bitcoin prices soaring.

Tesla began accepting bitcoin payments in March 2021, but stopped accepting bitcoin as a payment method shortly after May. In a tweet, Musk said the company was “concerned about the rapidly increasing use of fossil fuels in Bitcoin mining and trading.” Musk added that Bitcoin would be reconsidered as a source of energy if miners moved to more sustainable energy sources. payment method.

In its first-quarter 2022 report, filed in April, Tesla wrote that it believes bitcoin “has long-term digital asset potential as an investment and as a liquid alternative to cash.” But it also warned shareholders that price changes tend to affect its profitability, in what appeared to be a harbinger of Wednesday’s announcement.

“During the first quarter of 2021, we recorded an impairment loss of approximately $27 million as a result of the book value of our bitcoin,” the company wrote in an April 25 SEC filing. changed, and we gained $128 million from the sale of Bitcoin.”

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/tesla-sells-75-of-its-bitcoin-assets-worth-936-million-in-q2/
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