How much can change in a year? Following some significant investments in Bitcoin in 2021, Tesla sold $936 million worth of digital currency in the second quarter of 2022, reducing its Bitcoin holdings by 75%, the company reported in fresh investor papers.
Tesla aggressively adopted Bitcoin in 2021, investing $1.5 billion in it as CEO Elon Musk spoke about its benefits over conventional fiat money.
Tesla buyers were able to purchase automobiles with Bitcoin for a portion of the year.
However, as Tesla noted in its financial summary for the second quarter, “Bitcoin impairment” has recently had an impact on company profits.
Bitcoin Reached Dizzying Heights in 2021
The carefully monitored automaker’s actions sparked a rise in interest in cryptocurrencies, which contributed to Bitcoin reaching record highs in 2021.
Tesla gained immediately as a result of locking in over $100 million in profits from its cryptocurrency investment.
Before Tesla announced its plans in February 2021, the notoriously erratic Bitcoin was already on the rise.
The value of the cryptocurrency rapidly increased by tens of thousands of dollars.
Tesla discontinued its Bitcoin vehicle sales in May 2021, citing the negative environmental effects of the cryptocurrency’s excessive use of coal and other fossil fuels for mining.
But following a slump in the middle of the summer, Bitcoin surged once more in the fall, reaching an all-time high of $68,990.90, according to Coindesk.
Markets Transformation Since Last Fall
The promise that cryptocurrencies would provide some degree of independence from inflation and politics has been a key component of their allure from their inception.
But as the U.S. central bank raises interest rates and investors reposition their holdings in cryptocurrencies and other assets, a conflict in Europe, rising inflation, and a depressed stock market have revealed that Bitcoin is susceptible to very conventional market factors.
Even though it has enormous resources and a CEO who can influence markets with a tweet, Tesla is merely one of several investors.
Before Tesla disclosed its selloff on Wednesday, one Bitcoin was worth more than $24,000.
Its value has significantly decreased by Thursday morning to well below $23,000.
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