Elon Musk is something of an icon within crypto. That’s due in large part to his association with the dogecoin meme, but it’s also because Tesla is one of the most prominent institutional investors in bitcoin. Or at least, it was.
In Tesla’s latest earnings report, released Wednesday, the company revealed it has sold the majority of its bitcoin: “We have converted approximately 75% of our Bitcoin purchases into fiat currency. Conversions in Q2 added $936M of cash to our balance sheet.”
Tesla’s $1.5 billion purchase of bitcoin, revealed in an SEC filing in February 2021, contributed to the market’s euphoria for cryptocurrency that caused bitcoin’s price to explode from around $20,000 in December 2020 to $60,000 in March 2021. Tesla’s reserves of bitcoin at one point hit a high of $2 billion in value. Tesla originally bought bitcoin to “provide us with more flexibility to further diversify and maximize returns on our cash,” the company said in its 2021 SEC filing.
Crypto prices have since fallen precipitously from their 2021 highs. Bitcoin is down 48% since the year began, while ether, the second biggest crypto, has fallen 57% since Jan. 1. There’s debate over whether Tesla’s bitcoin sale was done out of necessity to maintain cash flow, or if it reflects faltering confidence in bitcoin and crypto in general. Tesla has $621 million in cash, according to Wednesday’s earnings report, which means it would have been cash flow negative were it not for the $936 million bitcoin sale.
Though Musk is championed by bitcoin and crypto communities, he’s made statements both touting and criticizing the technology. “Bitcoin is almost as bs as fiat money. The key word is ‘almost,'” he said in February. “However, when fiat currency has negative real interest, only a fool wouldn’t look elsewhere.”
After announcing that Tesla would accept bitcoin as payment for its electric cars, Musk reneged and said it would be pausing such payments out of environmental concerns, given the amount of fossil fuel-fired energy its production requires. “Cryptocurrency is a good idea on many levels and we believe it has a promising future, but this cannot come at great cost to the environment,” he tweeted.
Tesla didn’t immediately respond to a request for additional comment.
Correction 3:10 p.m. PT: This story initially misstated the amount of cash Tesla got for its sale of cryptocurrency. The company gained $936 million in cash through the transaction.