Tesla, the electric vehicle giant led by Elon Musk, has made headlines once again with its latest cryptocurrency action. According to Arkham Intelligence, a blockchain analytics company, Tesla has transferred around $765 million worth of Bitcoin to unknown wallets. What Tesla intends to do with this large amount of cryptocurrency remains uncertain. As of now, Tesla, which is ranked as the fourth-largest Bitcoin holder among U.S. public companies according to BitcoinTreasuries, has not made any statement regarding whether the Bitcoin will be sold or held.
Tesla’s Relationship with Bitcoin
Tesla’s connection to Bitcoin has been notable since 2021, when the company made a bold investment of $1.5 billion into the cryptocurrency. This decision by Elon Musk, a known supporter of Dogecoin and other cryptocurrencies, was seen as a way for Tesla to maximize returns on its cash holdings and even potentially allow customers to buy Tesla cars using Bitcoin. After the announcement, Bitcoin’s value surged by more than $10,000.
However, later in 2021, Musk reversed course, citing environmental concerns about Bitcoin mining’s heavy reliance on fossil fuels, particularly coal. Following this, Tesla stopped accepting Bitcoin payments, causing the cryptocurrency’s value to drop by over 10%. Musk assured the public that Tesla would hold onto its Bitcoin and reconsider accepting Bitcoin payments if the mining process became more eco-friendly.
Tesla’s Crypto Strategy Over Time
In 2022, Tesla made another significant change by selling most of its Bitcoin holdings. It sold the cryptocurrency at an average price of $20,000 per Bitcoin, which was much lower than the price Tesla initially paid. This move, which some saw as selling at a low point, left the company with less than 10,000 Bitcoins in its reserves. Despite this, the remaining Bitcoin has increased in value by more than 350%, making Tesla’s current holdings more valuable than ever. If Tesla had held onto all of its original 43,200 Bitcoins, they would be worth over $3 billion based on Bitcoin’s recent price peak of $73,750.
As Tesla’s remaining Bitcoin holdings remain unclear, one notable change is on the horizon. New crypto accounting rules are set to take effect on December 15. These rules will require companies to report the value of their cryptocurrency at its fair market value, reflecting gains or losses in net income each reporting period. Previously, companies had to account for Bitcoin and other digital assets using a “cost-less-impairment” model, which only allowed them to reflect losses in value but not gains until the asset was sold. This change will give a clearer view of Tesla’s Bitcoin holdings in the future, whether they decide to sell or hold.