Electric car maker Tesla has ditched 75% of its holdings in Bitcoin, after the cryptocurrency fell in value by more than 50% this year.
In February last year Tesla boss Elon Musk revealed the company had invested $1.5 billion in Bitcoin, a move which helped the currency rally to almost $70,000 in November, prior to its crash. Currently one Bitcoin is worth around $25,000.
Tesla said it bought traditional currency with the $936 million it made from the sale of its Bitcoin.
The company has had a strange relationship with Bitcoin— one in many ways as volatile as the cryptocurrency itself. In 2021, after investing in the currency, Tesla announced it would no longer accept Bitcoin as a form of payment for its cars, citing the environmental impact of mining the digital coin.
Later that year, Musk declared Tesla would not be selling any of its Bitcoin. But as the cryptocurrency’s value tumbled, and Tesla shares also dropped in value, he appears to have changed his mind.
Tesla shares have fallen by almost 40% so far this year, but there is seemingly better news on the horizon. In its last quarterly earnings report, the company admitted its Bitcoin holdings negatively affected its profitability, but still reported higher than expected profits for the three months up to the end of June.
By raising prices on its most popular cars, Tesla was able to offset major challenges such as the rolling lockdowns in China, one of its major production hubs. The company also promised a “record-breaking second half” of the year. Production has increased in Berlin and Austin, Texas, where Tesla has its newer factories, which Musk has described as “giant money furnaces.”
By decoupling itself from Bitcoin, Tesla appears keen to lessen its exposure to volatility as much as possible, particularly with the threat of a recession looming over the world and an increasingly competitive electric car market.