Elon Musk's diamond hands have turned to paper after the Tesla CEO revealed that the electric car manufacturer sold 75 percent of its Bitcoin hoard this quarter.
Tesla was previously one of the largest corporate holders of Bitcoin, announcing a $1.5 billion investment in the top cryptocurrency last February. Estimates at the time pegged the purchase price at somewhere in the $30-40,000 range per bitcoin, meaning Tesla was riding high throughout the bull run that saw Bitcoin's price soar to well above $60,000. In May of last year, Musk tweeted, "Tesla has diamond hands," using emojis, an investing term that means not selling no matter how bad things get.
Now, the billionaire has capitulated. Tesla's earnings report for the second quarter, released on Wednesday, revealed that the company sold the majority of its Bitcoin holdings for $936 million in cash. The reason Musk gave for the sale is basically that the company needed money, and he blamed COVID-19 lockdowns in China that led to factory shutdowns.
“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,” Musk said in an earnings call, adding that the sale “should be not taken as some verdict on Bitcoin."
The reaction among Bitcoin holders online was a mixture of resentment and confusion over the sale due to the widespread assumption that Musk had sold at a loss, given the recent downturn that wiped out over 50 percent of Bitcoin's value. Many Bitcoiners were unbothered, however, choosing to remain true to the faith. "If you sell 75% of your Bitcoin, you will only have 25% of your Bitcoin left," tweeted Michael Saylor, CEO of Microstrategy, the largest corporate holder of Bitcoin. He also tweeted diamond hands emojis.
However, Tesla CFO Zachary Kirkhorn said on the Wednesday earnings call that the company had actually sold its BTC for a "realized gain," meaning it actually made a profit on the bitcoins that it sold. The chunk that Tesla still holds is underwater, however, leading to a total hit to the bottom line of just over $100 million although it could always increase in value in the future.
Musk also revealed that Tesla owns some Dogecoin, a joke cryptocurrency that he has promoted over the years, and has not sold any of it although it's not clear how much Doge Tesla holds. On Wednesday night, after the news broke, Musk replied to a tweet by Dogecoin co-founder Billy Markus containing a Squid Game meme: "Haha true." He also responded to a tweet from the official Dogecoin account announcing a software upgrade, saying, "Upgrades!"
Musk may have diamond hands—just not for Bitcoin.