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Elon Musk sold bitcoin to prove liquidity as cash alternative

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Tesla chief Elon Musk said on Tuesday the electric car maker sold 10% of its bitcoin holdings to prove it’s a good substitute for cash.
He was responding to comments from Barstool Sports founder Dave Portnoy, who questioned whether Tesla had profited from a bitcoin pump-and-dump scheme – which encourages investors to boost the price of an asset based on exaggerated statements.
Elon Musk disclosed on Monday that it sold $272 million worth of Bitcoin in the Q1 of 2021, making more than $100 million in profits from the sale. The automaker’s first-quarter earnings showed continued profitability, as revenue increased 74% compared to the same period of 2020.
After the earnings report, Portnoy tweeted: “So am I understanding this correctly? @elonmusk buys #bitcoin. Then he pumps it. It goes up. Then he dumps it and make a fortune. Listen I own 1 #Bitcoin but #bitcoin is exactly who we thought it was. Just don’t be last 1 #HODLing the bag.”
Musk rejected his opinion, saying: “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.”
Portnoy said earlier this year he would never purchase bitcoin, but has now changed his stance and calls himself a “true believer” in the cryptocurrency.
On an earnings call with investors and experts, Tesla’s chief financial officer Zachary Kirkhorn said the company plans to continue adding bitcoin to its balance sheet from vehicle sales.
Registering a $101 million gain from selling 10% of its BTC holdings over the quarter accounts for $0.25 per share of the $0.93 per share reported earnings, Deutsche Bank strategists noted. Meanwhile, topping Wall Street estimates qualifies Musk for two options payouts worth a combined $11 billion, according to Reuters.
Musk himself has not been open about how much bitcoin he personally owns, but his latest tweet looks to suggest he’s not planning to sell it.
Bitcoin increased above $54,500 on Tuesday, rising 16% from a low of around $47,200 last week. Tesla shares fell 2.5% in pre-market trading, as some analysts said simply meeting Wall Street expectations was rather underwhelming.
 

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