Musk is "heartbroken" about Bitcoin. Tesla's poor performance increases the probability of selling 40,000 Bitcoins

Wu Shuo Author | Tan Shu

Editor of this issue | Colin Wu

Earlier this year, Elon Musk suddenly announced that Tesla had bought $1.5 billion worth of Bitcoin, which made cryptocurrency more popular. After all, as the richest man, Musk has extraordinary appeal and influence. Subsequently, Tesla announced support for Bitcoin payments, but gave up in a short time because it "consumed too much fossil energy."

During this period, Tesla sold one-tenth of its Bitcoin (currently holding about 43,000 Bitcoins). After announcing that it would no longer accept Bitcoin payments, when asked whether it had sold the remaining Bitcoins, Musk tweeted that "Tesla has a pair of diamond hands" (1). However, on the 4th, Musk tweeted again, saying that he was "heartbroken" about Bitcoin.

The term "diamond hands" comes from the famous "WallStreetBets" section on Reddit. Earlier this year, "WallStreetBets" became famous for hyping up "GameStop" stocks, causing Wall Street short sellers to go bankrupt. "Diamond hands" is a common term in this forum, meaning never sell.

Therefore, Musk's "diamond hand" tweet means that he will not sell, but such a tweet cannot prove that Musk will hold the coins, especially since he has already sold one-tenth of the coins. Considering that Musk has been accused by the SEC for tweeting many times in recent years and spent tens of millions of dollars to settle, in order to avoid the suspicion of "manipulating the market", Musk obviously cannot give a clear explanation on Twitter before the operation (whether buying or selling Bitcoin).

The situation Tesla is facing now makes things more delicate. For cryptocurrency investors, the best news now is that Musk has sold Bitcoin, which will make the price of Bitcoin as far away from Musk's influence as possible in the future, so as to avoid the situation where Musk sends a tweet and the price of Bitcoin drops by half (the heartbroken expression on the 4th caused Bitcoin to suddenly drop by 2%).

If Tesla does not sell the remaining coins, cryptocurrency investors need to be wary of a potential "Tesla double kill" because as Tesla's stock price falls, the probability of it selling Bitcoin may increase.

Tesla Financially Needs to Sell Bitcoin

Today, Tesla's stock price is less than $600, which is one-third lower than its historical high of $900 at the end of January. The huge loss in market value has caused Musk to fall from the throne of the world's richest man. The price of Bitcoin has also fallen by more than one-third from this year's high. From this point of view, Tesla's holding of Bitcoin cannot hedge against the decline in its own stock price.

What's more troublesome is that the price of Bitcoin is now close to the original cost price when Tesla bought it. If the price continues to fall, it will become a financial burden on Tesla. Therefore, Tesla has reason to get rid of this burden before the price falls below its purchase cost.

Bitcoin is bad for Tesla's carbon emissions business

Since its establishment, Tesla's automobile business has not made money. Its profits mainly come from selling carbon emission shares. Since this year, the debate on the environmental impact of Bitcoin has become more and more intense. Although there are still different opinions on the actual impact of Bitcoin mining on the environment, for a company like Tesla that relies on trading carbon emissions as its main source of profit, holding Bitcoin, an asset with huge environmental controversy, is undoubtedly not conducive to its current business model. Tesla cars stopped accepting Bitcoin payments based on this consideration.

In its 2020 financial report, Tesla achieved its first annual profit ($721 million), of which the sale of carbon credits brought in $1.58 billion in revenue, more than twice its net profit. In the first quarter of this year, the sale of carbon credits generated a record $518 million in revenue, far exceeding the revenue from selling Bitcoin.

Tesla's operating conditions are worrying and the Chinese market is facing a public opinion crisis

Tesla's past sales data shows that it often "sprints" its sales in the last month of each quarter, which not only makes the quarterly report look better, but also leaves more room for the market's imagination. However, this June is a bit troublesome for Tesla.

First of all, the Chinese market is Tesla's most important market outside the United States. However, due to the female car owner's rights protection incident in April this year, Tesla's sales in China fell sharply in May, with only a few thousand cars sold in the country. After the continued fermentation in May, Tesla's sales in China in June may be even worse.

In overseas markets, Tesla recently announced the recall of [5530](2) Model 3 and Model Y cars due to seat belt problems, which is equivalent to Tesla's sales in China in May. It is conceivable that Tesla's sales data will not look good in June. If Musk still wants to submit a financial report, selling coins is likely to be his choice.

Tesla's global sales in May and the trend of the coin price. If the coin price continues to rise, Musk may not sell it, but if the sales data of Tesla released by the China Passenger Car Association this month is not good enough, I am afraid Musk is likely to choose to "sacrifice the pawn to save the car". (Head picture from cryptoknowmics)

[1]:https://twitter.com/elonmusk/status/1395027147161489412

[2]:https://www.reuters.com/world/us/tesla-recalls-nearly-6000-us-vehicles-over-potentially-loose-bolts-2021-06-02/ Welcome to read Wu’s selected reports: Huobi exclusive report, Binance exclusive report, Bitmain series, regulation and card freezing series, Filecoin series, currency circle chaos exposure, mining farm supervision dynamics, etc.

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