Tesla has cashed out most of its bad bitcoin bet

• Tesla has sold 75% of its massive bitcoin stake, the company said on Wednesday.
• In 2021, it spent $1.5 billion on the cryptocurrency, in an unprecedented move for a firm its size.

Tesla seems to be abandoning its ten-figure bitcoin bet amid a severe slump in cryptocurrency markets.

The electric-car maker said on Wednesday that it has sold approximately 75% of its bitcoin as of June 30. It said it converted $936 million worth of the cryptocurrency into fiat between April and June.

Tesla made waves — and sent the price of bitcoin skyrocketing — when it announced a $1.5 billion investment in the cryptocurrency in February 2021. A company of Tesla's stature placing such a big bet on the burgeoning and volatile crypto market was unprecedented. Tesla held onto much of its stake as bitcoin soared to new heights by the end of 2021.

But the value of bitcoin has plummeted since amid a wider economic downturn. The currency has lost more than 50% of its value this year and took another sharp dive on Wednesday afternoon following Tesla's announcement.

On a conference call on Wednesday, CEO Elon Musk said the sales were due to uncertainty around COVID-19 restrictions in China. A coronavirus lockdown in Shanghai severely limited Tesla's ability to produce vehicles at its factory there, cutting its overall sales for the quarter.

"We were uncertain as to when the Covid lockdowns in China would alleviate, so it was important for us to maximize our cash position," he said. "We are certainly open to increasing our bitcoin holdings in the future so this should not be taken as some verdict on bitcoin."

Musk added that Tesla still holds Dogecoin, a cryptocurrency that started as a joke and that Tesla accepts as payment on its online store.

The automaker said it still holds $218 million in "digital assets" as of June 30, down from $1.26 billion at the end of the previous quarter. It justified its initial purchase by saying that it was looking into liquid assets that had more upside than cash.

Tesla reported second-quarter earnings on Wednesday, beating analyst estimates but logging its first ever quarter-over-quarter decline in profit.