Elon Musk Forced to Sell 75% of Tesla Bitcoins

 

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Elon Musk forced to sell 75% of Tesla bitcoins to preserve profit. The American automaker anticipated a weak second quarter, due to several supply chain problems. To remain an undisputed leader in the eyes of investors, Elon Musk had to resort to converting its bitcoins into cash.


Once again, Tesla proves its resilience. Although electric car deliveries were not up to par in the second quarter, the Nasdaq-listed manufacturer managed to maintain its turnover and turn a profit. Despite the semiconductor crisis and the closure of its Shanghai fab, the US company posted a net profit of $2.3 billion in this period, almost double that of last year's second quarter.


However, for the first time since the beginning of 2021, its profits did not reach a new record. Its revenues, at $16.9 billion, also disappointed somewhat. To cope with this small pocket of air, Elon Musk had announced in June the elimination of 3 to 3.5% of the workforce, without touching the workers.


In addition, to guarantee its margins, Tesla decided to raise the prices of its models. Its cheapest car currently sells in the United States at $48,840. They're frankly at embarrassing levels, Mr. Musk said. But that's to reflect supply chain and production shocks and crazy inflation, he added, saying he expected it would eventually "come down a little bit.


However, gross margin in its automotive business, a particularly closely watched indicator, fell slightly.


Bitcoin As a Cash Reserve


To preserve his profits, but also his reputation on the stock market - as the billionaire will have to face a lawsuit against Twitter in October over his proposed purchase - Elon Musk stressed that he had sold 75% of the bitcoins held by Tesla to ensure he had sufficient liquidity: the operation brought him $963 million. The company had pulled off a surprise by buying $1.5 billion of the virtual currency at the beginning of 2021. One bitcoin was worth $30,000 at the time, bringing the number of tokens purchased to around 45,000.


Since then, the price of bitcoin has fallen sharply since May 2022, standing at around $20,000. Given the profit generated by the decentralized token, Elon Musk obviously anticipated the drop in production.


We didn't know when the confines in China were going to lighten up, the boss justified during a conference call. The deal should not be interpreted as a verdict on bitcoin, he said, assuring that Tesla had not sold its dogecoins, another cryptocurrency, and was not giving up on buying more bitcoins.


To maintain its profits, the world's sixth-largest market capitalization company also continues to rely on the carbon credits it sells to businesses through its non-polluting cars. The company has also diversified into software with a driving assistance solution, FSD beta, still in the development phase.


To improve its profitability, the group is counting on accelerating the pace of production at its new factories in Berlin and Austin (Texas)

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