Tesla’s foray into the cryptocurrency market made it quite a bit of coin, the company announced.
The electric carmaker’s first-quarter earnings released late Monday revealed that it sold some of the $1.5 billion worth of bitcoin that it purchased in February, giving the company a $101 million bump in profit. That’s no small lump of cash, considering it makes up nearly one-fourth of the company’s $438 million in profit, Tesla’s biggest ever.
On a conference call with analysts, Chief Financial Officer Zach Kirkhorn elaborated on the company’s interest in the cryptocurrency and said Tesla intends to hold the digital token over the long-term, despite its recent sale. The company still has about $1.3 million in bitcoin.
“Elon and I were looking for a place to store cash that wasn’t being immediately used, trying to get some level of return on this, but also preserve liquidity,” said Kirkhorn, who was officially appointed Tesla’s “master of coin” last month.
“Bitcoin seemed at the time, and so far has proven to be, a good decision — a good place to place some of our cash that’s not immediately being used,” he added. “It is our intent to hold long-term.”
When Tesla announced its initial purchase of bitcoin, it also said it would accept the digital coin as payment for its cars. That made Tesla the first major automaker and one of the first major companies in any industry to embrace bitcoin. The move helped spark a strong run by bitcoin to its recent peak.
When Tesla disclosed its bitcoin holdings in February, the crypto was exchanging hands at about $38,540 per coin, according to data from Coindesk. By April 15, the digital coin closed at a price of $63,460 per coin and is now trading at about $55,170.
Some have criticized Tesla and CEO Elon Musk for publicly embracing bitcoin, helping the price run up and then selling the coin. Before Tesla’s disclosure of its bitcoin purchase, Musk was credited with increasing the prices of several cryptocurrencies, including dogecoin, by posting positive messages about them on Twitter.
Dave Portnoy, Barstool Sports founder who’s recently made a name for himself playing the stock market, addressed Musk on Twitter over Tesla’s bitcoin dump.
“So am I understanding this correctly? @elonmusk buys #bitcoin. Then he pumps it. It goes up. Then he dumps it and make a fortune,” Portnoy wrote, urging his followers not to be the last one holding the bag.
Musk responded, “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.”
Despite Musk’s explanation, Tesla’s move raises questions that could catch regulators’ attention. The SEC has flagged Musk in the past for his market-moving tweets. The SEC charged Musk with fraud in 2018 for his tweets about taking the company private at $420 per share.
Musk ultimately settled with the SEC, and was forced to give up his role as chairman of the company’s board. He also paid a $20 million fine as well as another $20 million fine for the company itself.