Tesla Explains Bitcoin Purchase as Place to Store Cash But Preserve Liquidity

Tesla (NASDAQ:TSLA) announced Q1 2021 earnings today that beat on both the top and bottom line. Included in the presentation deck was the fact that Tesla holds cryptocurrency, specifically Bitcoin as part of its treasury strategy.

In the deck, Tesla states:

“Quarter-end cash and cash equivalents decreased to $17.1B in Q1, driven mainly by a net cash outflow of $1.2B in cryptocurrency (Bitcoin) purchases, net debt and finance lease repayments of $1.2B, partially offset by free cash flow of $293M.”

During the earnings call, Tesla stated that it had purchased $1.5 billion in Bitcoin and then sold a 10% portion during Q1 – during March specifically. Bitcoin traded over $59,000 during March – near its all time high. Tesla said their decision to purchase Bitcoin has so far proven to be a good decision.

Tesla representatives noted that they were looking for someplace to hold cash while maintaining a high degree of liquidity. Alternatives either provided very little yield or did not offer the same liquidity as Bitcoin.

“We are pleased with how much liquidity there is in the market,” stated Tesla.

The company added that they believe long term in the value of Bitcoin and they intend on accumulating Bitcoin as people purchase cars.

 



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