Artur Widak | NurPhoto | Getty Images Early last year, Tesla invested $1.5 billion in bitcoin, banking on what the electric car maker called the digital currency’s “long-term potential.” The company has already sold three-quarters of its holdings. “Since the end of the second quarter, we have converted approximately 75% of our Bitcoin purchases to fiat currency,” Tesla said in its second-quarter earnings statement on Wednesday. The company said those sales added $936 million in cash to its balance sheet. It’s a quick retreat for Tesla and CEO Elon Musk, who has been a strong crypto booster over the past year, tweeting frequently about various digital currencies. The price of bitcoin has lost half its value in the past four months during what has been dubbed the “crypto winter.” For Tesla, the fair market value of bitcoin holdings reached $2.48 billion in the first quarter of 2021 and ended the year at around $2 billion. The company did not say at what price it sold or give the size of its impairment, but bitcoin started the second quarter near $46,000 and ended below $19,000. Barclays analyst Brian Johnson estimated earlier this week that Tesla would see $460 million worth of bitcoin-related impairment due to the sale. “The reason we sold a bunch of our bitcoin holdings was that we were uncertain about when the lockdowns in China would ease, so it was important for us to maximize our cash position,” Musk said on an earnings call on Wednesday . “This should not be taken as a verdict on bitcoin,” he said, adding that Tesla is open to increasing its cryptocurrency holdings in the future. However, when asked about bitcoin’s potential as an inflation hedge for earnings, Musk said Tesla’s main goal is to accelerate the transition to sustainable energy and called bitcoin a “sideshow in a sideshow.” In the first quarter of 2021, when Tesla moved heavily into bitcoin, the company said the decision was a matter of becoming more flexible, diversifying and gathering returns from its cash. The company quickly sold 10% as the currency rallied, contributing $101 million in earnings in the period. Kirkhorn said at the time that the company’s intention was to “hold what we have for the long term and continue to accumulate Bitcoin from transactions from our customers as they purchase vehicles.” In May last year, Musk said Tesla would stop accepting bitcoins for car purchases because of the environmental impact of mining, but added that the company “will not be selling any bitcoins.” A week later, he posted emojis on Twitter, declaring that the company has “diamond hands” when it comes to investing in bitcoin and credited “our master of the currency.” A lot can change in a year. — CNBC’s Lora Kolodny contributed to this report. WATCH: We’re more worried about Tesla’s quarterly results this time around, says CFRA’s Garrett Nelson
