Bitcoin Price Drops After Elon Musk Says Cryptocurrency Sales Would Maximize Tesla’s Cash Position After Shaky Second Quarter
Tesla CEO Elon Musk has failed to boost investor confidence in cryptocurrencies after the EV maker sold the majority (75 percent) of its Bitcoin holdings.
The world’s most valuable automaker also released shaky second-quarter financial results after hours on Wednesday, reflecting some of the tough challenges it currently faces.
During the release of its second quarter results, Musk also revealed that Tesla’s new plant near Berlin was making 1,000 cars per week in June, and the Austin, Texas, plant is expected to meet the same production target in the coming months. .
That came after Elon Musk said last month that Tesla’s new auto plants in Texas and Germany were “lost billions of dollars” and “giant money-making furnaces.”
Musk also admitted that the Covid closures of his Shanghai factory were another major concern for Tesla.
Tesla reportedly halted most production at its Shanghai plant in the first two weeks of July to upgrade the site to increase output.
These shutdowns at Gigafactory Shanghai resulted in approximately 254,000 deliveries (down 18 percent from Q1), up from over 300,000 expected.
And this impacted Tesla’s financial performance in the second quarter.
Tesla’s second-quarter profits fell 32 percent as it posted a record profit of $3.3 billion in the first quarter.
However, in the second quarter, the company reported net income of $2.26 billion.
Revenue for the quarter, meanwhile, came in at $16.93 billion, compared to $17.1 billion that Wall Street had expected.
The company also sold 75 percent of its bitcoin holdings, leading to a drop in the price of cryptocurrency.
Tesla’s $1.5 billion investment in Bitcoin, which it unveiled in February 2021, sparked a surge in demand for the digital currency.
The company revealed in February of this year that the value of Bitcoin it owned was $1.99 billion (£1.47 billion) at the end of 2021.
Tesla’s February 2021 investment announcement sparked a spike in Bitcoin’s value, and in March 2021, the auto company said it would start accepting Bitcoin as payment for Tesla vehicles.
But in May 2021, it changed its stance after critics drew attention to the environmental concerns surrounding the currency, which is “mined” using a highly energy-intensive process that often relies on fossil fuels.
Bitcoin’s price traded as high as $70,000 last November before it (and other digital currencies) crashed spectacularly.
Bitcoin is currently trading for only $22,990.
“The reason we sold some of our bitcoin holdings was because we weren’t sure when the Covid lockdowns in China would ease, so it was important for us to maximize our cash position,” Musk said. CNBC during Tesla’s earnings call.
“This should not be taken as a judgment on Bitcoin,” Musk added.
However, CFO Zachary Kirkhorn and Musk confirmed that Tesla had not sold any of its dogecoin.
In its earnings report, Tesla said the company continues to experience production delays due to supply chain and other issues that limited its ability to consistently run its factories at full capacity.
Tesla is also restructuring its operations and is in the process of cutting 10,000 jobs after Elon Musk recently announced he had “a super bad feeling” about the economy and planned to cut its workforce by 10 percent and “stop all hiring worldwide.” “.
The company recently closed its San Mateo office with the loss of more than 200 jobs.
At that location, data annotation teams had helped improve the company’s Autopilot driver assistance technology.
And last week, Andrej Karpathy, Tesla’s Director of AI and the leader of the Autopilot Vision team, announced on Twitter that he had resigned from Tesla.
Despite these setbacks, Musk said during the earnings call that the company remains on track to release a beta version of full self-driving capabilities by the end of the year.
Musk has repeatedly made big claims in this regard and has aggressively hyped Tesla’s driver assistance system (Autopilot) and self-driving technology for years.
In July 2020, Elon Musk said Tesla was “very close” to achieving level 5 autonomous driving technology.
Level 5 is the holy grail of autonomous driving technology, as level 5 vehicles do not require human intervention and the need for human drivers is eliminated.
It is even said that level 5 cars don’t even have steering wheels or accelerator/brake pedals.
These cars will be free of geofencing and can drive anywhere and do everything a normal car can do to a human driver.
Tesla cars are currently operating at level two, which requires the driver to remain alert and ready to act, with hands on the wheel.