In early 2021, electric car maker Tesla Inc. (TSLA) invested $1.5 billion in bitcoin, cashing in on what it believed was the digital currency's "long-term potential." However, fast forward to mid-2022, the company has already ditched nearly three-quarters of its holdings in the crypto currency. While releasing its second-quarter earnings on Wednesday, the company said, "As of the end of Q2, we have converted approximately 75 percent of our Bitcoin purchases into fiat currency." Tesla said that those sales brought in $936 million in cash. This move is a step backward for the car maker and its CEO Elon Musk, who was a big supporter of crypto during last year's runup, constantly tweeting about various digital currencies. Bitcoin has lost half the value of its price during the last four months in what is being dubbed as a "crypto winter." For the EV maker, the fair market value of its bitcoin holdings touched $2.48 billion in 2021's first quarter and finished the year at about $2 billion. The company didn't reveal at what price it sold or provide the size of its impairment, but bitcoin started the second quarter at close to $46,000 and ended below $19,000. Commenting on his company's bitcoin policies, Musk said on Wednesday, "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 so it was important for us to maximize our cash position. However, when asked about bitcoin's potential as an inflationary hedge on the earnings call, Musk said that the company's main aim is to accelerate the transition to sustainable energy, and called bitcoin "a sideshow to a sideshow." In the first quarter of 2021, when Tesla went big on bitcoin, the company said the decision was taken to become more flexible, diversify and pick up returns from its cash holdings. The company quickly sold 10 percent as the currency ran up, bringing about profit to the tune of $101 million during that period. In May last year, Musk said Tesla would stop accepting bitcoin for car purchases because of the environmental impact of mining, but he added that the company "will not be selling any bitcoin." A week later, he tweeted emojis indicating the company has "diamond hands" when it comes to bitcoin investing, and he credited "our master of coin."
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