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Elon Musk says Tesla sold 10% of its bitcoin to show it's a good alternative to cash – but he isn't selling his personal holding

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Tesla CEO, Elon Musk.

Tesla chief Elon Musk said on Tuesday the electric vehicle maker sold 10% of its bitcoin holdings to prove it’s a good substitute for cash.

He was responding to comments from Barstool Sports founder Dave Portnoy, who questioned whether Tesla had profited from a bitcoin pump-and-dump scheme – a practice that encourages investors to boost the price of an asset based on exaggerated statements.

Tesla disclosed on Monday that it cashed out $272 million worth of digital assets in the first quarter of 2021, making more than $100 million in profits from the sale. The automaker’s first-quarter earnings showed continued profitability, as revenue rose 74% compared to the same period of 2020.

After the earnings report, Portnoy tweeted: “So am I understanding this correctly? @elonmusk buys #bitcoin. Then he pumps it. It goes up. Then he dumps it and make a fortune. Listen I own 1 #Bitcoin but #bitcoin is exactly who we thought it was. Just don’t be last 1 #HODLing the bag.”

Musk rejected his opinion, responding with: “No, you do not. I have not sold any of my bitcoin. Tesla sold 10% of its holdings essentially to prove liquidity of bitcoin as an alternative to holding cash on balance sheet.”

Portnoy said earlier this year he would never buy bitcoin, but has now changed his stance and calls himself a “true believer” in the cryptocurrency.

On an earnings call with investors and analysts, Tesla’s chief financial officer Zachary Kirkhorn said the company plans to continue adding bitcoin to its balance sheet from vehicle sales.

Registering a $101 million gain from selling 10% of its bitcoin holdings over the quarter accounts for $0.25 per share of the $0.93 per share reported earnings, Deutsche Bank strategists said. Meanwhile, topping Wall Street estimates qualifies Musk for two options payouts worth a combined $11 billion, according to Reuters.

Musk himself has not been open about how much bitcoin he personally owns, but his latest tweet seems to suggest he’s not planning to sell it.

Bitcoin rose above $54,500 on Tuesday, rising 16% from a low of around $47,200 last week. Tesla shares fell 2.5% in pre-market trading, as some analysts said simply meeting Wall Street expectations was rather underwhelming.