Elon Musk says Tesla sold 10% of its bitcoin to show it's a good alternative to cash - but he isn't selling his personal holding

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Elon Musk. Frederic J. Brown/Getty Images

Tesla CEO Elon Musk said on Tuesday that the electric-vehicle maker had sold 10% of its bitcoin holdings to prove that it's a good substitute for cash.

He was responding to comments from the Barstool Sports founder Dave Portnoy, who questioned whether Tesla had profited from a bitcoin pump-and-dump scheme, a practice that encourages investors to boost the price of an asset based on exaggerated statements.

Tesla disclosed on Monday that it had cashed out $272 million worth of digital assets in the first quarter of 2021, making more than $100 million in profit. The automaker's first-quarter earnings showed continued profitability as revenue rose 74% from the same period in 2020.

After the earnings report, Portnoy tweeted: "So am I understanding this correctly? @elonmusk buys #bitcoin. Then he pumps it. It goes up. Then he dumps it and make a fortune. Listen I own 1 #Bitcoin but #bitcoin is exactly who we thought it was. Just don't be last 1 #HODLing the bag."

Musk responded: "No, you do not. I have not sold any of my Bitcoin. Tesla sold 10% of its holdings essentially to prove liquidity of Bitcoin as an alternative to holding cash on balance sheet."

Portnoy said earlier this year that he would never buy bitcoin, but he's changed his stance and called himself a "true believer" in the cryptocurrency.

On an earnings call with investors and analysts, Tesla's chief financial officer, Zachary Kirkhorn, said the company planned to continue adding bitcoin to its balance sheet from vehicle sales.

Read more: CEO of crypto exchange Kraken breaks down why he could 'easily' see bitcoin reach $250,000 next year - and shares 2 emerging trends he's excited about

A $101 million gain from selling 10% of Tesla's bitcoin holdings over the quarter would account for $0.25 of the $0.93 per share Tesla reported, Deutsche Bank strategists said. Topping Wall Street estimates qualifies Musk for two options payouts worth a combined $11 billion, according to Reuters.

Musk has not said how much bitcoin he owns, but his latest tweet suggests he's not planning to sell it.

Bitcoin climbed above $54,500 on Tuesday, rising 16% from a low of about $47,200 last week. Tesla shares fell 2.5% in premarket trading, as some analysts said that simply meeting Wall Street expectations was rather underwhelming.

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