Can the sale of bitcoins by Tesla be considered a bargain?
Just a week ago, the crypto market was rocked by news that Tesla had sold 75 percent of its cryptocurrency reserves. Now it’s clear that the deal even made a profit for the electric car maker, as Tesla made $64 million in realized gains from liquidating its Bitcoin holdings between the start of the year and June 30. We tell you more about what’s going on.
As a reminder, not all major Bitcoin investors are getting rid of their own cryptocurrency holdings. In particular, as of today, MicroStrategy’s position has sagged by 30.51 per cent of the total value of dollars invested in BTC. As a result, the company’s 129,699 bitcoins are now valued at $2.76 billion.
MicroStrategy’s Bitcoin investments
El Salvador’s situation is worse. The country owns 2,381 BTCs, which have sagged in value by 52.66 per cent. The state’s unrealised loss today is the equivalent of $56.43 million.
El Salvador’s Bitcoin investments
Note that Tesla's bitcoin sale is not a reason to panic. We've dealt with the situation in more detail in a separate piece.
How did Tesla sell its bitcoins?
The total value of BTC on Tesla’s balance sheet has dropped by $170 million in the first six months of 2022 due to a significant collapse in the coin market. We have clarified the latest data: as of today, BTC has sagged in value by 55.27 per cent since the first of January 2022.
Bitcoin’s exchange rate change since the beginning of 2022
This was revealed in the company’s Form 10-Q filing with the US Securities and Exchange Commission (SEC). However, compared to the average bitcoin purchase price, the company still managed to make $64 million on a large coin sale.
At the moment, Tesla has approximately 10,800 BTC worth $237 million remaining in its reserves. Notably, the company did not disclose the average value of its coin sales during the second quarter of the year. However, analysts at platform Arcane examined Tesla’s activity and concluded that the company sold 29,060 BTC at an average price of around $32,209.
Analysis of Tesla’s Bitcoin savings by Arcane analysts
Recall, information about Tesla’s investment in BTC appeared in early 2021. At that time, the company invested $1.5 billion in the cryptocurrency and even made Bitcoin available as a means of payment for its electric cars for a while. However, Tesla CEO Elon Musk soon announced that he would stop accepting BTC due to concerns about the cryptocurrency’s low eco-friendliness. In addition, before that, the company got rid of 10 percent of its own cryptocurrency holdings to test the liquidity of the coin market.
In total, Tesla recorded earnings per share of $2.27 in the second quarter on total revenue of $16.93 billion. While the company’s profitability was down from the first quarter, it was up from the same period in the previous year. According to Cointelegraph’s sources, the company’s profitability has been affected by rising inflation and increased competition in the battery market.
On topic: How much did Tesla earn from its Bitcoin investment?
While some companies are selling crypto, others are giving it away for free. The day before, the Chipotle restaurant chain in the US announced the launch of an online game called Buy The Dip, where prizes will be digital assets totaling around $200,000 in Bitcoin, Etherium, Solana, Dogecoin and Avalanche. In addition, there will also be promo codes for guacamole and queso blanco given away for one cent.
As a reminder, the phrase 'buy the dip' translates to 'buy the drawdown'. In fact, that legendary expression is often used by cryptocurrency fans. It implies abandoning negative emotions in the face of a market collapse and buying coins at a discounted rate. It should be noted that such scheme really works at bull run stage, but if the market crashes for a long period of time, the effectiveness of the strategy will be felt only in a long term period of time.
To participate in the game, one has to go to a separate website of Chipotle. Each participant may play only three times a day during working hours, i.e. between 10:00 a.m. and 6:00 p.m. The promotion will run until 31 July – World Avocado Day.
Recall that other popular fast food brands in the US have previously organised similar promotional campaigns. In November 2021, Burger King partnered with trading platform Robinhood to give away BTC, ETH and DOGE as part of various promotions for its customers. In addition, McDonalds’ Chinese subsidiary once announced a campaign for customers to win 188 unique tokens to commemorate the anniversary of the fast-food chain’s opening in the country.
The campaign from Chipotle is a great way to introduce many Americans to the world of cryptocurrency for the first time. The brand’s establishments are very popular in the US, with a diverse population visiting them. Thus, Chipotle’s promotional campaign will be a great contribution to the promotion of digital assets in the country.
We think that Tesla's bitcoin sale can hardly be called a success. Yes, the automaker made $64 million in realized profits, but given its total investment of $1.5 billion, that's only a 4 percent return. Moreover, the company got rid of the cryptocurrency after it more than halved in value from its peak. The bottom line is that a bearish trend for the cryptocurrency market is not suitable for companies that constantly need fiat to run operations.
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