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During Today's Tesla earnings call, Tesla CEO Elon Musk explained the reason for the company’s sale of 75% of its Bitcoin holdings, worth approximately $936 million, as noted in its Q2 earnings report.
"The reason we sold a bunch of our Bitcoin holdings was that we were uncertain when the COVID lockdowns in China would alleviate," Musk said on the call. "So it was important for us to maximize our cash position, given the uncertainty of COVID lockdowns in China."
Although China had eased COVID restrictions in major cities at the end of May, a jump in cases in Beijing and other key regions prompted the government to re-impose rules a few weeks later. Earlier this month, mass testing and lockdowns were implemented in Shanghai.
As a result, China’s “zero COVID policy” is again being put to the test, prompting new warnings of larger economic headwinds. Reuters reported that the world's second-largest economy contracted sharply in the second quarter from the first in both industrial production and consumer spending.
On the call, the company explained that Telsa converted most of its Bitcoin holdings to fiat for realized gain, netting a $106 million cost to the P&L (profit and loss) included within restructuring expenses related to targeted staffing reductions.
Despite the sell off, Musk said that Tesla is open to increasing its coin holdings in the future.
"This should not be taken as some verdict on Bitcoin," he said, making sure to add that Tesla has not sold any of its Dogecoin.
In a follow-up question and answer session, Musk said that cryptocurrency was not something the company thinks a lot about and is "a sideshow to the sideshow" and an afterthought for the company.
Musk clarified that Tesla’s primary goal is “to accelerate the advent of sustainable energy.”
"We're neither here nor there on cryptocurrency," he said.