Tesla Sells a Fraction of Its Bitcoin
In February, Tesla made a $1.5 billion investment in Bitcoin. Now, it has sold a portion of that Bitcoin and made $272 million in proceeds.
The company indicated in a report that its quarter-end cash and equivalents decreased to $17.1 billion in Q1 of 2021. It says that this was “driven mainly by a net cash outflow” of $1.2 billion in cryptocurrency purchases. The value of Tesla’s entire Bitcoin holdings has increased from $1.5 billion to $2.6 billion (1.7x), meaning it sold just a fraction of its holdings.
Corporate Holdings Boost Bitcoin Prices
The news is relevant in light of earlier promises from Tesla and its CEO, Elon Musk. In late March, Musk stated that Bitcoin paid to Tesla for its products “will be retained as Bitcoin, not converted to fiat currency.” However, the company made no such guarantee about the Bitcoin that it has purchased itself, meaning that it is free to sell those holdings.
If Tesla commits to holding more Bitcoin, this will likely be seen as more beneficial to the cryptocurrency industry. Non-circulating Bitcoin increases demand for the coins that remain in circulation, potentially driving up prices. It is likely that institutional investment is responsible for the 600% gain in value that Bitcoin has seen over the past year.
Other notable corporate investors include Square and Microstrateg. Collectively, companies and financial institutions hold about $76 billion worth of Bitcoin, equivalent to 6.8% of the total Bitcoin supply.
Disclaimer: information contained herein is provided without considering your personal circumstances, therefore should not be construed as financial advice, investment recommendation or an offer of, or solicitation for, any transactions in cryptocurrencies.