Tesla Sold 75 Percent of Bitcoin Holdings, Adding $936 Million to Balance Sheet

Representation of cryptocurrency Bitcoin is seen in this illustration taken on Nov. 29, 2021. Dado Ruvic/Reuters

Tesla reported that it sold much of its Bitcoin investment after saying the cryptocurrency was one of a number of factors that impacted operating income in the second quarter of 2022.

The electric car company told shareholders on Wednesday in its Q2 Quarterly Update (pdf) that it converted around 75 percent of its Bitcoin purchases into fiat money, adding $936 million of cash to its balance sheet.

Tesla did not reveal the size of the Bitcoin impairment. In February, the company said the fair market value of the electric-vehicle maker’s Bitcoin holdings was $1.99 billion as of the end of last year.

Telsa originally invested $1.5 billion in 2021. It is now converting the digital currency into fiat money as the value of Bitcoin plunged more than 50 percent this year.

The price of Bitcoin rose to around $70,000 in the fourth quarter of 2021, but as of July trades for less than $23,000.

Growth in vehicle deliveries, higher selling prices, and profit in other parts of the business were among other factors that impacted Tesla’s operating income in Q2 2022. However, the electric car company still saw operating income improve year-on-year to $2.5 billion.

Earlier this year, Tesla briefly accepted Bitcoin as payment for sales of certain products, but founder and CEO Elon Musk stopped this after previously saying the digital currency would always be accepted.

“We continued to make significant progress across the business during the second quarter of 2022,” the company said in filings.

“Though we faced certain challenges, including limited production and shutdowns in Shanghai for the majority of the quarter, we achieved an operating margin among the highest in the industry of 14.6 percent, positive free cash flow of $621M and ended the quarter with the highest vehicle production month in our history.”

Quarterly Report

Tesla reported that its new factories in Germany and Texas continued to ramp up production in the second quarter of 2022.

The company reported a milestone of producing more than 1,000 vehicles in a single week at its Gigafactory in Berlin.

“From our Austin factory, the first vehicles with Tesla-made 4680 cells and structural battery packs were delivered to our U.S. customers. We are continuing to invest in capacity expansion of our factories to maximize production,” Tesla reported.

The company expressed a positive outlook for the second half of the year, citing factories in California and Shanghai as achieving their “highest-ever production months.”

Total revenue grew 42 percent year-on-year in the second quarter $16.9 billion, but was impacted by growth in vehicle deliveries, increased average selling price, and growth in other parts of the business, the company reported.

Its operating quarter-end cash flow, cash equivalents, and short-term marketable securities increased sequentially by $902 million to $18.9 billion. The company said this was mostly driven by free cash flow of $621 million, partially offset by debt repayments of $402 million.