Remember Elon Musk hyping crypto? Well, Tesla dumps most of bitcoin holdings

Elon Musk-led Tesla has converted approximately 75 percent of its bitcoin holdings into fiat currency, which added $936 million of cash to its balance sheet, the electric carmaker said on July 20 as part of its regular quarterly update.

During a conference call, Musk, whose tweets have made and also burnt cryptocurrencies, said the sale was made to increase liquidity when Tesla was uncertain about how long the COVID-19 lockdown in China would continue.

"The reason we sold a bunch of our bitcoin holdings was that we were uncertain as to when the Covid lockdowns in China would alleviate," he said. Musk added that the company had not sold its holdings of the Dogecoin cryptocurrency.

The maverick billionaire made it clear that Tesla's crypto decision should not be taken as a verdict on bitcoin, the original and the world's biggest cyrptocurrency. Tesla was open to increasing its cryptocurrency holdings in the future, he said.

Also Read | Bitcoin recovers after falling on news Tesla sold 75% of its holdings

The disclosure comes almost a year after Musk publicly announced that Tesla would not sell its bitcoin holdings and touted the token as a “long-term potential”.

Tesla's $1.5-billion investment in bitcoin in February 2021 started a bull rally for the world's biggest cryptocurrency but in May, the company stopped accepting payment in the digital currency, owing to concerns over the "climate impact" of bitcoin mining.

Tesla on July 21 reported a higher-than-expected quarterly profit as multiple price hikes helped offset production challenges caused by COVID-19 lockdowns in China.

Musk said he expected inflation to begin easing by the end of the year and also that Tesla didn't have a demand problem.

He dismissed the idea that global economic problems were hurting in Tesla despite vehicle prices' rising to what he called "embarrassing levels".

The US price of Tesla's Model Y long-range version is $65,990, up more than 30 percent from the start of 2021.

Tesla stock has fallen by over 38 percent this year and is trading at $742 apiece.