Musk says Tesla sold bitcoin to prove liquidity as an alternative to cash

Elon Musk said that Tesla Inc. sold 10% of its Bitcoin holdings to demonstrate the liquidity of the token,adding that he kept his personal investment in cryptocurrency.

Tesla's earnings report showed thatthe company, which bought more than $1 billion worth of tokens earlier this year, received $101 million in revenue from the sale. Musk said on Twitter that Tesla was essentially trying to "prove the liquidity of Bitcoin as an alternative to holding cash on its balance sheet."

 

Electric car maker included cryptocurrencyon the agenda of corporate treasurers around the world by investing in Bitcoin. While many still consider the token too risky to compare to cash, Tesla Chief Financial Officer Zachary Kirkhorn said on the earnings call that the company believes in the long-term value of Bitcoin.

For a number of strategists, Bitcoin and other tokensare purely speculative investments and not a legal alternative to cash. For example, BCA Research Inc. argues that Bitcoin does not work as a store of value or unit of account due to its volatility, although these are the main functions of money.

Musk has been actively supporting cryptocurrencies for some time, however, and announced late last month that Tesla would begin accepting Bitcoin payments for its cars.

The world's largest cryptocurrency rose approximatelyup 1% to $53,765 as of 12:16 p.m. in Tokyo on Tuesday. It has fallen from a peak of nearly $64,870 in mid-April but is still up sevenfold over the past year.

Tesla shares tumbled 3.1% in late trading after the results were announced on Monday, despite record first-quarter earnings.