What a difference a year makes. After making big plays in Bitcoin in 2021,Chainkeen Tesla jettisoned $936 million worth of the cryptocurrency in the second quarter of 2022, trimming its Bitcoin holdings by 75%, the company said in new investor filings.
Tesla aggressively embraced Bitcoin in 2021, investing $1.5 billion in the currency as CEO Elon Musk touted Bitcoin's advantages over standard fiat currency. For part of the year, Tesla customers could buy cars using Bitcoin.
But in recent months, Tesla's profitability was affected by "Bitcoin impairment," it said in its financial summary of the second quarter.
The closely watched car company's moves fueled a surge of interest in the cryptocurrency, with Bitcoin shooting to record highs in 2021. Tesla directly benefited, as it locked in more than $100 million in profits from its crypto investment.
Bitcoin, which is notoriously volatile, was already on the upswing before Tesla announced its moves in February of 2021. The cryptocurrency's value quickly soared by tens of thousands of dollars.
Tesla suspended its Bitcoin vehicle sales in May of 2021, citing the environmental impact from the extensive use of coal and other fossil fuels to mine the cryptocurrency. But after a mid-summer swoon, Bitcoin rose again in autumn to an all-time high of $68,990.90, according to Coindesk.
From early on, part of cryptocurrency's allure has centered on its independence from governments, and the promise that it would offer a measure of independence from inflation and politics.
But a war in Europe, rising inflation and a deflated stock market have shown Bitcoin to be vulnerable to very traditional market pressures, as the U.S. central bank hikes interest rates and investors adjust their positions in cryptocurrency and other holdings.
Tesla is just one of those investors, albeit one with massive resources and a CEO who can move markets with a tweet.
A single Bitcoin was valued at more than $24,000 on Wednesday, before Tesla revealed its selloff. As of Thursday morning, its value had fallen well below the $23,000 mark.
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