- According to Tesla’s second-quarter earnings, the company converted about 75% of its Bitcoin into dollars, adding some US$936 million of cash to its balance sheet, but suffering an impairment as a result of the sale.
- Bitcoin slipped below US$24,000 and was trading around US$22,780 at the time of writing as news of the Tesla sale roiled a nascent recovery in cryptocurrencies.
With a CEO as irascible as Elon Musk, electric vehicle maker Tesla’s (+0.80%) holdings of Bitcoin were always going to be touch-and-go and given how Musk walked away from his acquisition of Twitter, it ought to come as no surprise that he would back down from Bitcoin.
According to Tesla’s second quarter earnings, the company converted about 75% of its Bitcoin into dollars, adding some US$936 million of cash to its balance sheet, but suffering an impairment as a result of the sale.
A Blomberg Intelligence estimate suggests that Tesla’s Bitcoin impairment could be as much as US$740 million.
Although Musk has long expressed interest in Bitcoin and Dogecoin, and at one point allowed customers to buy Tesla’s electric vehicles with Bitcoin, only to suspend that move late, the recent sale of Bitcoin into the dip may have had more to do with accounting than ideology.
A quick read of Tesla’s cashflow statement reveals a cashflow bonus of US$936 million from the sale of Bitcoin, with the cashflow change of around US$847 million as a result.
In other words, without the cash infusion from the sale of Bitcoin, Tesla would likely have been cashflow negative this past quarter, which seems to suggest that the electric vehicle maker might have been trying to dress up its earnings.
Like other companies, Tesla has been dealing with inflation and an overall slowing economy this past quarter, and a sharp decline in cryptocurrency prices has not helped its balance sheet which at one point held some US$1.5 billion worth of Bitcoin.
During a call with investors, Musk addressed the Bitcoin sale claiming that “it should not be taken as some verdict on Bitcoin,” but was more to address “overall liquidity of the company given COVID shutdowns in China.”
China has emerged as a key market for Tesla, but the electric vehicle maker has not been immune to Beijing’s policies, including its zero-Covid lockdown policies that has hit Tesla’s factories as well as demand for its products.
Bitcoin slipped below US$24,000 and was trading around US$22,780 at the time of writing as news of the Tesla sale roiled a nascent recovery in cryptocurrencies.
