Tesla Under Intense Scrutiny in China
Electric vehicle manufacturer, Tesla, has come under intense pressure in China, leading to speculations that its brief reign in the Asian country may soon be short-lived. China is a new market for the electric cars firm looking to establish one of the largest manufacturing plants there. Tesla just started distributing its vehicles in China with over 30,000 of them produced last month.
While speculations have arisen as to the fate of Tesla in China, there are also talks that it may trade off its current Bitcoin holding following the intense pressure it is facing from Chinese regulators. Tesla’s romance with the flagship cryptocurrency, Bitcoin began with a $1.5 billion purchase of the digital asset back in February. However, while Tesla still holds on to a large portion of Bitcoin, that romance ended on a sour note after Tesla discontinued Bitcoin payments in May.
Chinese Regulators Sniff Around Tesla’s Activities
The EV firm’s CEO, Elon Musk had announced the dissolution of Bitcoin payments citing environmental concerns as the rationale behind its decision. Meanwhile, the dissolution came alongside an assurance that Tesla would reinstate the crypto payments if the energy used in mining Bitcoin became 50% clean. Till now, Tesla has not lived up to its assurance, suggesting other undisclosed concerns about Bitcoin payments, one of which may be China’s growing hostility towards crypto transactions and Bitcoin mining.
It is likely that Tesla’s market in China may soon crumble faster than it has created a presence there. The company had come under intense pressure in China lately, putting it in bad light. In what seemed like an attempt to curry favor with the Chinese government, Elon Musk tweeted on July 1st, where he spoke highly of China’s infrastructure and encouraged people to visit the country. However, regulatory bodies have been prowling around the firm’s activities.
Any Likelihood that Tesla Will Sell Off its Bitcoin Holding?
If the Chinese government asks Tesla to leave the country, it could be a big blow, not only for the firm itself but also for the crypto market. Out of its Bitcoin holdings, Tesla has only sold 10% of it, which according to it was to test the liquidity of the asset. This had a bearish effect on the market at the time it was announced; same as its discontinuance of Bitcoin payments.
Certainly, a crackdown on the firm’s operations by Chinese regulatory bodies would test the firm’s belief in the asset- whether its February Bitcoin purchase was instigated by the hype behind the asset or a plan to hold the asset for long-term- even as Bitcoin is trading at almost half its ATH in April.
Although Tesla has made more returns on Bitcoin than it has ever done on its products, it appears more probable that its promise to reinstate Bitcoin payments might have been merely lip-service. At least since its assurance, Bitcoin Mining Council has announced in a report earlier this month that BTC green mining was now at 56%.
Most crypto enthusiasts drew Elon’s attention to the announcement, but the Tesla billionaire is yet to respond. It may be argued that a BTC sell-off by Tesla has no correlation with a potential crackdown in China, as such, there is no cause for alarm.
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