Bitcoin prices have recovered after a short-term sell-off catalyzed by news of electric vehicle manufacturer Tesla selling three-quarters of its BTC holdings.
Cryptocurrency market responses to the recent news of Tesla selling 75 percent of its Bitcoin published on July 20 within the Tesla Q2 2022 earnings report. The electric vehicle manufacturer, led by Elon Musk, revealed the sale of $936 million worth of Bitcoin over the second quarter of 2022.
Tesla’s original $1.5 billion investment in Bitcoin now amounts to nearly $220 million, significantly reducing the manufacturer’s digital asset holdings. Musk, speaking during the Tesla earnings call, noted that the sale did not represent a verdict on cryptocurrency or Bitcoin but instead was executed to maximize the fiat cash position of the company amidst uncertainty within COVID-related lockdowns in China.
Bitcoin Sale “Not a Verdict” — Musk
Tesla announced support for Bitcoin payments in 2021, but rapidly rolled back support from Bitcoin purchases of Tesla electric vehicles following concerns regarding the environmental impact of Bitcoin mining.
Questions forwarded by Tesla investors to Musk during the quarterly report conference focused on Tesla’s position on cryptocurrency moving forward, with Must stating that cryptocurrency is not something the organization “thinks of a lot,” citing Bitcoin and other cryptocurrencies as a “sideshow” to the core Tesla goal of accelerating the advent of stable energy.
Tesla Chief Financial Officer Zachary Kirkhorn justified the sale of the company’s Bitcoin as a rebalancing, stating that the disposal occurred in order to offset “impairment charges on the remainder of our holdings, netting a $106 million cost to the P&L included within restructuring and other.”
Bitcoin Market Stabilizes Following Tesla BTC Sale
Market response to the announcement of the sale saw Bitcoin prices fall by approximately 2.6 percent before rapidly recovering close to the one-month high of $23,300.
Muted reactions to the sale of Tesla’s Bitcoin holdings played out differently from the 2021 announcement that the car manufacturer would accumulate $1.5 billion in BTC, which catalyzed a $3,000 price increase and catalyzed a drive to a new all-time high of $43,000.
The sale of Tesla’s Bitcoin saw Tesla’s overall cash and cash equivalents holdings reach $847 million for the second quarter of 2022. Additional statements by Musk indicate that the electric vehicle manufacturer may consider further investments in digital assets after conducting due diligence on the environmental impact of cryptocurrencies and the potential applications of renewable energy in the cryptocurrency mining industry.