American electric vehicle and clean energy company Tesla has sold nearly $275 million worth of Bitcoin months after a landmark $1.5 billion investment, it revealed in a filing yesterday.
The sale meant Tesla cut its position by 10%, adding over $101 million to its revenues in total.
Tesla profits boosted
Tesla attributed a chunk of profits to its Bitcoin sales, coupled with those of its electric vehicles. As per UK news network BBC, Tesla’s profits for the first three months of the year were $438 million, a huge jump from the reported $16 million last year.
“It is our intent to hold what we have long term and continue to accumulate Bitcoin from transactions from our customers as they purchase vehicles,” the company’s chief financial officer, Zachary Kirkhorn, told investors.
Tesla announced last month it would allow buyers to buy its vehicles using Bitcoin—with all proceeds stored in Bitcoin rather than being converted to cash.
However, not everyone was upbeat about Tesla’s Bitcoin position. Nicholas Hyett, an equity analyst at stockbroker Hargreaves Lansdown, said that despite the generally positive results, there could be problems ahead.
“Tesla has made some $101 million on its investment so far, which is all well and good, but huge gains and losses aren’t really what corporate treasuries are all about,” he said, adding that the firm has gained skeptics:
“Investors could well argue that if they wanted to have exposure to Bitcoin they would have bought some themselves and don’t need Tesla to do it for them.”
Musk says he hasn’t sold any Bitcoin
Meanwhile, some in investing circles Tesla CEO Elon Musk had used his influential position to pump the prices of Bitcoin and sell at a profit. “Elon Musk buys Bitcoin. Then he pumps it. It goes up. Then he dumps it and makes a fortune,” tweeted Dave Portnoy, the founder of popular sports blog Barstool Sports.
It was a comment to which Musk himself responded, “No, you do not. I have not sold any of my Bitcoin.”
Musk noted that Tesla sold 10% of its holdings to “prove the liquidity” of the Bitcoin in terms of holding the asset on the books instead of cash.
But some liquidity it is. Bitcoin fell from $64,000 to under $50,000 in the past. And while Tesla may or may not have sold in the same period, the drop proved Bitcoin remains a notoriously volatile asset to hold on one’s books.
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Source: Tesla sells 2m of Bitcoin, but Elon Musk is still HODLing