October 3, 2022

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Elon Musk delegitimizes the world’s largest electronic currency

2 min read

“Conversions in the second quarter added $936 million of cash to our balance sheet,” “At the end of the second quarter, we converted approximately 75% of our Bitcoin purchases into fiat currency,” Tesla said in a letter to shareholders on Thursday. Wednesday as part of the company’s earnings report.

In February 2021, Elon Musk’s electric car manufacturer announced that it invested $1.5 billion in Bitcoin, and then sold 10% of its stake in April. On Wednesday, Tesla said its digital assets have shrunk to $218 million and a deterioration in Bitcoin hurt second-quarter performance.

Tesla CEO Elon Musk said on the earnings conference call that the company sold Bitcoin to maximize its cash position due to uncertainty related to the Covid shutdowns. However, he stated that the sale should not be seen as “a verdict on Bitcoin”.

In November the cryptocurrency has pulled back from a record high of nearly $69,000. The largest cryptocurrency by market value erased gains after the sales were reported, falling as much as $1.6% to $22,928.

When Tesla threw a massive party for its new Austin factory in April, a drone show featured an image of Dogecoin. Musk has become a huge influence on cryptocurrencies. He tweeted favorably about Dogecoin as an alternative and posted photos of his dog Floki, who like Dogecoin’s mascot is a Shiba Inu.

The additional pullback marks an aggressive move by one of the crypto sector’s most prominent bulls during what has been dubbed “crypto winter.” Musk’s adoption of Bitcoin helped serve as a catalyst for the digital currency after Tesla briefly accepted the token for purchases but later discontinued the payment option citing environmental concerns about its mining processes.

However, Musk has positioned himself as pro-crypto, hinting in recent weeks that his other company, SpaceX, may join Tesla in accepting Dogecoin for future merchandise purchases.

At the end of the second quarter, the software company’s own Bitcoin stack was worth about $3.4 billion less than the previous quarter. Shares of MicroStrategy Inc., another major corporate buyer of Bitcoin, fell about 4% in after-market trading.

“Rough estimates would put Tesla’s Bitcoin sales at around the $30,000 price level, with $218 million in digital assets remaining on his balance sheet,” said Josh Olszewicz, head of research at crypto fund manager Valkyrie Investments. .

“The need for cash on the balance sheet, as well as the strongly bearish market conditions since the beginning of the year, possibly contributed to this decision. From a treasury management perspective, the downside volatility may have been too unappealing to ignore in the short term,” Olszewicz said. Published by The USA Herald, news and information agency.

 

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