Entering the bull market twice and selling cryptocurrencies, Bitcoin may still bring Tesla tens of millions of dollars in losses.

Having bought 48,000 BTC in January 2021, Tesla has sold Bitcoin twice. Despite still holding a realized profit, selling the remaining 10,800 BTC at the current market price could potentially result in Tesla facing tens of millions of dollars in losses from this Bitcoin investment.

February 2021 Purchase of $1.5 Billion in Bitcoin

According to the documents filed with the SEC, Tesla purchased around $1.5 billion worth of Bitcoin in early February last year:

• Amount held: 48,000 BTC
• Average price: $31,250

Tesla also explained the reasons for the purchase in the documents:

To further diversify and maximize returns on our cash, we may invest a portion of our cash in alternative reserve assets such as digital assets, gold bars, gold ETFs, and we hope to begin accepting Bitcoin as a form of payment in the future. Upon receipt of payment, we may or may not liquidate. We believe that Bitcoin has high liquidity and volatility and when we want to sell, it may not be at the expected market price.

Initial Sale of 10%, Profiting $100 Million

In Tesla's financial report released at the end of April last year, it was indicated that in Q1, 10% of Bitcoin was sold, leading to the following deductions:

• Amount sold: 10% of the total 48,000 BTC purchased, equivalent to 4,800 BTC.
• Average selling price: $272 million in returns, divided by 4,800 BTC, averaging around $56,666.
• Total profit: Selling price of $56,666 – purchase price of $31,250 * 4,800 BTC = $121 million, approximately 81%.
• Remaining amount held: 43,200 BTC.

Further Sale of 75% in Q2 2022

In Tesla's second-quarter financial report this year, the data is as follows:

• Amount sold: 32,400 BTC.
• Average selling price: $936 million in returns, divided by 32,400 BTC, averaging around $28,888.
• Q2 profit/loss: Selling price of $28,888 – purchase price of $31,250 * 32,400 BTC = -$76.52 million, approximately -7.5%.
• Remaining amount held: 10,800 BTC.

Combining the profits from the previous year's Q1 Bitcoin sales, Tesla realized approximately $44.47 million in profits from its Bitcoin investments.

However, with Tesla still holding 10,800 Bitcoin, if sold at the current market price, it would result in a loss of approximately $50 million on this investment.

Reasons for the Sale

Founder Elon Musk mentioned the following points regarding the sale of Bitcoin in the earnings call transcript:

1. Why sell Bitcoin?

Given the uncertainty surrounding the situation in China, maximizing Tesla's cash reserves is crucial at the moment.

2. Willingness to increase BTC holdings in the future

Tesla is willing to increase its Bitcoin holdings in the future, so this sale should not be seen as a definitive stance on Bitcoin but rather a consideration for the overall liquidity of the company's funds.

Musk also emphasized that no Dogecoin has been sold, and Zach Kirkhorn, who was appointed as Master of Coin in March last year, also echoed the argument for holding Dogecoin.

3. Cryptocurrency has never been a focus

Tesla has never reported details about Dogecoin in its financial reports or SEC filings. Musk may have been referring to the introduction of Dogecoin payments for Tesla products earlier this year when addressing the issue of "Bitcoin hedging not being significant," emphasizing Tesla's primary goal:

Tesla's goal is to accelerate the search for renewable energy. Cryptocurrency is really not that important to us, it's not something Tesla needs to constantly consider. Our main motivation is to bring sustainable energy sooner, and cryptocurrency is not crucial.