by?William Naranjo?on July 24, 2022
- Elon Musk, the CEO of Tesla, provided an explanation for the company’s decision to sell 75% of its Bitcoin holdings, which were valued at $936 million, during July 22nd 2022 earnings call.
- Musk stated on the call that he was unsure of when the COVID lockdowns in China will end, which is why he sold a significant portion of his Bitcoin holdings. Given the uncertainties surrounding COVID lockdowns in China, it was crucial for us to optimize our cash position.
- At the end of May, China loosened COVID restrictions in major cities, but a spike in cases in Beijing and other important areas led the authorities to re-impose restrictions a few weeks later. In Shanghai, lockdowns and widespread testing were initiated earlier this month.
- China’s “zero COVID policy” is now being put to the test once more, which has led to fresh forecasts of stronger economic headwinds. According to Reuters, both industrial production and consumer expenditure fell significantly in the second quarter compared to the first in the second-largest economy in the world.
- Tesla realized a gain when it converted the majority of its Bitcoin holdings to fiat, the business said on the call. This resulted in a $106 million cost to the P&L (profit and loss) that was tacked onto restructuring costs related to deliberate workforce reductions.
- Musk stated that Tesla is open to growing its coin holdings in the future despite the sell-off.
- He was careful to point out that Tesla has not sold any of its Dogecoin and added, “This should not be seen as any conclusion on Bitcoin.”
- In a subsequent round of questions and answers, Musk stated that the corporation does not give cryptocurrencies any thought and that it is “a sideshow to the carnival” and an afterthought.
- Tesla’s main objective, according to Musk, is “to expedite the arrival of sustainable energy,” he said.
by?William Naranjo?on July 24, 2022
