Elon Musk Tesla Bitcoin made headlines in February 2021 when he said on Twitter that his electric car company, Tesla (TSLA -2.79%), would buy Bitcoin (BTC -0.68%) instead of cash. At the time, many people thought that the purchase was one of the most important things to happen in the short history of Bitcoin. When Bitcoin was bought for $1.5 billion, a rush of buyers drove up the price by nearly 20% in less than 24 hours.
Tesla and Bitcoin are back in the news because Tesla sells Bitcoin they bought more than a year ago. Musk said during a quarterly earnings call that Tesla had sold 75% of its Bitcoin.
He said that the company needed cash because operations in China were uncertain because of long COVID-19 lockdowns.
Few following problems they were facing;
- Problems in the supply chain
- A lack of workers
- The company needed cash on hand to make sure that the production problems didn’t have as big of an effect.
The statement Elon Musk on Bitcoin dropped BTC little after the announcement, but it quickly made up for those losses after Musk explained what he meant.
He said that the sale “should not be seen as a verdict on Bitcoin” and that the company would look to increase its Bitcoin holdings in the future.
Elon Musk Tesla is selling bitcoin. Is this a good or bad idea?
By selling its Bitcoin, Tesla was able to increase its cash on hand and lessen the impact of the factories in China being shut down. In the end, it may have been the right thing to do to make sure that any more effects of the lockdowns were small and wouldn’t hurt Tesla’s bottom line for Q2. It looks like the decision was made to try to reduce the amount of damage that would have been shown on Tesla’s earnings report.
Even though Tesla’s production numbers went down, it was able to make up for it by having more cash on hand. Even though it’s not always a good idea to sell an asset for short-term gains, it seems to have worked in this case, since Tesla’s stock went up about 10% after the earnings report.
In Q2, Tesla made a total of 258,580 Model S, X, 3, and Y cars. This is a 25% increase from the same time last year. The total number of packages sent out was 254,695, which is a 27% increase from the previous year. But production in Q2 was about 17% lower than in the previous quarter, and 55,000 fewer cars were made than in the previous quarter.
Tesla said that it was still having trouble making cars because of COVID shutdowns, problems with global supply chains, labor shortages, and “logistics and other problems” that made it hard to keep factories running at full capacity.
Although they sold Bitcoin, Tesla is still one of the largest publicly traded companies to hold Bitcoin, behind MicroStrategy with 130,000 BTC (about $2.48 billion) and Galaxy Digital Holdings with 16,400 BTC (about $313 million).
His Bitcoin purchases and sales attract a great deal of media interest because of his status as one of the world’s most successful businesses and wealthiest individuals. People pay closer attention during sales. However, it appears that the company’s decision to sell Bitcoin was the correct one.
In regards to cryptocurrency, what does Elon Musk have in mind for the future?
Earlier this year, some texts showed the world’s richest man Elon Musk discussing the future of the widely used social networking platform with a number of internet entrepreneurs, including Block Inc.’s Jack Dorsey and FTX’s Sam Bankman-Fried. A proposal was made to accept Elon Musk crypto favored cryptocurrency, Dogecoin.