The bitcoin (BTC)-keen carmaking giant Tesla has sent a bullish signal to the global business community, with its chief financial officer Zachary Kirkhorn claiming that BTC has “long-term” worth and could be used to solve cash liquidity problems.
In an earnings call to investors reporting on FY2021 first-quarter results, Tesla confirmed that last month it sold 10% of the BTC holdings it had bought at the start of the year. But the automaker justified the sale, claiming that the firm wants to use BTC to boost its liquidity as and when it needs to.
Kirkhorn, a.k.a. Master of Coin, stated,
“Elon and I were looking for a place to store cash that wasn’t being immediately used [to] try to get some level of return on this but also preserve liquidity. […] Being able to access our cash very quickly is super important to us right now. And there aren’t many traditional opportunities to do this […] that we could get good feedback on, particularly with yields being so low and without taking on additional risk or sacrificing liquidity.”
But bitcoin, he said, has “proven to be a good place to place some of our cash that is not immediately being used” for what he termed “daily operations” or “maybe not needed until the end of the year.” In the meantime, the CFO stated, Telsa could hope to “get some return” on its investment.
On social media, some crypto skeptics expressed incredulity at the sale, however, with David Portnoy, the founder of the popular Barstool Sports blog essentially accusing Musk of a pump-and-dump move.
But Musk was quick to rebut the accusation, claiming that Portnoy (who has a history of trolling crypto advocates and personalities such as the Winklevoss twins) had misunderstood the situation.
The Tesla supremo tweeted:
“We do believe long term in the value of bitcoin. So it is our intent to hold what we have long term and continue to accumulate bitcoin from transactions from our customers as they purchase vehicles.”
In its Q1 report, Telsa wrote that its quarter-end cash and cash equivalents had “decreased to USD 17.1 billion in Q1, a fact that had been “driven mainly by a net cash outflow of USD 1.2 billion in cryptocurrency (bitcoin) purchases, net debt and finance lease repayments of USD 1.2 billion,” and that this had been “partially offset by free cash flow of USD 293 million.”
BTC prices in March rose to just under USD 60,000 for much of the month – at the time of the Tesla announcement back in early February, bitcoin was worth under USD 39,000.
At 08:39 UTC, BTC trades at USD 54,677 and is up by 3.5% in a day, trimming its weekly losses to less than 2%.
TESLA MOST LIKELY HOLDING OVER TWO BILLION WORTH OF COIN AND WE GOT PEOPLE OUT HERE CALLING IT BEARISH NEWS. LMAO HFSP.
— ODELL (@matt_odell)
“Institutional will never sell” was always the stupidest meme out there. I maintain the next 4yr cycle bear market… https://t.co/ODiBjm8VvI
— Bob Loukas (@BobLoukas)
That was the price Elon was willing to pay in order to make #bitcoin attractive to MANY other companies; boardrooms and corporate financial governance.
— Jim O’Flaherty (@jimofl) April 27, 2021
Tesla just further de-risked #Bitcoin for other corporate treasuries.
— abhi (@shekisms) April 26, 2021
There is so much bullish about this, implies further purchases of BTC moving forward + confirms what we already kin… https://t.co/bXx4C0pQng
— Nik Patel (@cointradernik)
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