At the start of the year, bad news keeps coming for Elon Musk. In addition to his seemingly endless setbacks with Twitter, the boss of Space X now has to deal with a not very serene business climate on Tesla’s side.
After the postponement to 2024 of the release of the Tesla Cybertruck and the prolonged shutdown of its Shanghai factory, the manufacturer must deal with a considerable loss in the value of its assets in bitcoin. According to official documents published by the company, these melted by almost $204 million in the year 2022 alone.
Tesla victim of a risky policy of his boss
The year 2021 was notably marked by an astonishing position taken by Elon Musk. In the midst of the COVID crisis, the boss of Tesla had notably indicated that he believed in the longevity of bitcoin. In the process, Tesla had invested nearly $ 1.5 billion in cryptocurrency during the first quarter of the same year.
To give more weight to this decision, the manufacturer had indicated that bitcoin was an excellent way to store cash in order to access it more quickly. He also added that it was an asset offering a better return on investment than that which can be enjoyed in central banks. After recording the entry into its market of a player as influential as Tesla, bitcoin saw its price soar rapidly. This allowed the manufacturer to quickly make a profit of $101 million after selling 10% of its stock in bitcoins.
But now, a few months later, Tesla will review its position by refusing to accept bitcoins as a means of payment as it had announced earlier. To justify its about-face, the manufacturer puts forward arguments related to the quantity necessary to extract bitcoin. This will contribute to the fall of the currency and therefore the value of Tesla’s investment.
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Tesla, however, managed to limit the breakage
Bitcoin’s troubles will begin in early 2022. After reaching an all-time high of $68,789.63, the cryptocurrency will begin to drop dramatically. In a few months, it will lose almost 66% of its value to stabilize around 23,045.50 dollars.
In the meantime, Tesla will have sold almost 75% of its bitcoin holdings on the market, which it managed to exchange for traditional currency. The American manufacturer started its sales operation as soon as bitcoin fell. A promptness which allowed him to accuse a loss of 204 million dollars partially compensated by a receipt of 64 million dollars related to the trade of bitcoins. Either a net loss which is estimated at 140 million dollars.
Considering that in the fourth of 2022 alone, Tesla sold over 405,000 cars, there’s really nothing to worry about. When it comes to bitcoin, some experts believe the currency is likely to rally very soon. In particular because of buyers who will want to limit the risks by betting on known cryptocurrencies such as bitcoin and ether.
Source : Tech Crunch