Tesla's Bitcoin Purchase Anniversary: How the Automaker Went From $1.5 Billion Holdings to $225 Million

Today marks the second anniversary of Tesla buying $1.5 billion worth of bitcoin in hopes of diversifying and maximizing their returns on cash.

However, those hopes have not materialized that well since Tesla's bitcoin is still worth 33% less than its 2021 purchase price, according to the latest data provided by Cointelegraph on Wednesday, Feb. 8.

Tesla's Bitcoin Holdings

It is safe to say that the crypto market was at its peak between 2020 and 2021 as it gains massive traction from the public.

Tesla then bought $1.5 billion in BTC when it was on its way to achieving its first all-time high record on April 21 when it gained $58,000 in value. The automaker's purchase price at the time was worth $34,700, as per Bitcoin Treasuries' data.

However, Tesla's holdings were eventually reduced over time. In July 2022, the company sold a drastic 75% of its coins even though it initially planned to "hold on for dear life".

The move occurred at a time when Bitcoin recorded a loss after trading near $23,000. It was also sold during the second quarter of 2022 when the coin was valued at around $29,000, according to Cointelegraph.

While the move seemed to have benefited Musk, he said that the sale had nothing to do with Bitcoin losing its value at the time.

Tesla has since retained 9,720 BTC, but further price movement has not allowed the automaker to realize any significant investment gains. Tesla's remaining stockpile, valued at $225 million as of February 2023, is still 33% less than it was compared to its purchase, based on data provided by Bitcoin Treasuries.

According to data from Cointelegraph Markets Pro and TradingView, Tesla stocks had increased by 66% year to date as of the anniversary of the Bitcoin transaction, beating the 40% growth of Bitcoin.

The Crypto Market in 2022

2022 was an entirely different story for the crypto market compared to its successful gains in the previous years. It saw the bankruptcies of major exchanges such as FTX, the massive collapse of Terra, and the "crypto winter" completely rocking the industry.

Over the course of the year, Insider reports that Bitcoin lost nearly 65% of its value, ending it at roughly $16,548. At the beginning of 2022, Tesla paid between $30,000 and $40,000 for the token.

Tesla pulled back from bitcoin as other crypto assets failed; by July, it had sold 75% of its holdings. Musk attributed the move to China's COVID-19 lockdowns, claiming they raised the need for more liquidity at the company.

Tesla said that due to bitcoin's decline in value, it had to take an impairment charge of $204 million in 2022.

This was partially offset by its choice to exchange $64 million worth of bitcoin for fiat money, which resulted in a net non-cash loss of $140 million in bitcoin holdings, according to Insider.