Connect with us

Politics

WHY TESLA WAS RIGHT TO SELL 75 PERCENT OF ITS BITCOIN HOLDINGS IN Q2

Published

on

ValueWalk


Bitcoin sold off after Tesla Inc (NASDAQ:TSLA) revealed in its latest earnings report that it had sold 75% of its bitcoin holdings. Bitcoin has shed more than $700 from its value since midnight. However, cryptocurrency as a whole retains its $1 trillion market capitalization, at least for now, as the bitcoin price is still over 15% higher than it was a week ago.

So why did Tesla sell its bitcoin, and was it the right move? Crypto enthusiasts may be disappointed, but it was all business on Elon Musk’s part.

Tesla Posts Solid Results

Tesla released its second-quarter earnings results after closing bell on Wednesday. At $16.9 billion, the automaker’s revenue matched the consensus. Tesla also reported adjusted earnings of $2.27 per share, coming in ahead of the consensus at $1.83 per share. The stock popped in after-hours trading and now is up by more than 5% in early-morning trades.

The second quarter marked the end of Tesla’s quarterly streak of posting record revenue numbers. However, the EV maker’s sales were still robust despite the shutdown at its factory in Shanghai. China’s zero-COVID policy resulted in widespread shutdowns throughout the city, limiting production at Tesla’s factory. However, the automaker still touted an operating margin that was among the highest industry at 14.6%.

Tesla was also free cash flow positive at $621 million and ended the quarter with its highest vehicle production month ever. The automaker had previously reported that it had produced 258,580 and delivered 254,695 vehicles during the second quarter. Tesla still expects to grow its total delivery numbers by 50% year over year for 2022.

Was It Wise For Tesla To Sell Most Of Its Bitcoin?

Crypto enthusiasts are undoubtedly upset that Tesla unloaded 75% of its bitcoin. However, from a business standpoint, it made sense for the automaker to do so because it was better for shareholders. Analyst Marcus Sotiriou of digital asset broker GlobalBlock said in an email on Thursday morning that bitcoin reached a key resistance level of about $23,250, but after Tesla announced its sale, the cryptocurrency dropped.

In his statement regarding the automaker’s sale of $936 million worth of bitcoin, CEO Elon Musk said cryptocurrency isn’t yet contributing to an environmentally sustainable future. More importantly, he added that they sold their bitcoin due to uncertainty related to the lockdowns in China. In other words, Tesla wanted to raise cash in case China closed its factors for an extended period.

Historically, Tesla has often gone back to the till to raise more capital, and it has frequently been criticized for doing so due to its history of burning cash. However, this time around, the automaker decided to sell most of its bitcoin to raise capital instead of diluting shareholders further through a stock sale.

Sotiriou agrees that it made sense for Tesla to sell its bitcoin to raise capital due to the macroeconomic backdrop and rising interest rates. He also said the move serves as “an example of good risk management from the world’s richest man.” Sotiriou added that without the bitcoin sale, Tesla’s net change in cash would have been -$89 million.

“Funds and lenders who have faced liquidity issues have been heavily scrutinized for their poor risk management, and rightly so,” he said. “Hence, I don’t think Tesla should be criticized for managing their risk in this uncertain macroeconomic environment. They may well buy back bitcoin or other digital assets when conditions improve.”

What Does This Mean For The Bitcoin Price?

According to the crypto analyst, data from Glassnode shows retail investors are snapping up bitcoin at the fastest rate in history, so Tesla’s sale isn’t necessarily a bearish indicator for the cryptocurrency. Sotiriou noted that the 90-day change in bitcoin addresses with less than 1 coin — typically those owned by retail investors — is at record highs.

“The last time it was close to this high was in 2018 when bitcoin peaked at around $20,000,” he explained. “The fact that a similar rate of accumulation is happening now after a 70% drop demonstrates conviction from retail holders in Bitcoin’s long-term value.”

Looking forward, Edward Moya of OANDA expects bitcoin to be “in for a choppy period” until after next week’s decision from the Federal Open Market Committee. The Federal Reserve is expected to raise interest rates again at that meeting.

Published First on ValueWalk. Read Here.

Image Credit: by Pixabay; Pexels; Thank you!

Politics

Fintech Kennek raises $12.5M seed round to digitize lending

Published

on

Google eyed for $2 billion Anthropic deal after major Amazon play


London-based fintech startup Kennek has raised $12.5 million in seed funding to expand its lending operating system.

According to an Oct. 10 tech.eu report, the round was led by HV Capital and included participation from Dutch Founders Fund, AlbionVC, FFVC, Plug & Play Ventures, and Syndicate One. Kennek offers software-as-a-service tools to help non-bank lenders streamline their operations using open banking, open finance, and payments.

The platform aims to automate time-consuming manual tasks and consolidate fragmented data to simplify lending. Xavier De Pauw, founder of Kennek said:

“Until kennek, lenders had to devote countless hours to menial operational tasks and deal with jumbled and hard-coded data – which makes every other part of lending a headache. As former lenders ourselves, we lived and breathed these frustrations, and built kennek to make them a thing of the past.”

The company said the latest funding round was oversubscribed and closed quickly despite the challenging fundraising environment. The new capital will be used to expand Kennek’s engineering team and strengthen its market position in the UK while exploring expansion into other European markets. Barbod Namini, Partner at lead investor HV Capital, commented on the investment:

“Kennek has developed an ambitious and genuinely unique proposition which we think can be the foundation of the entire alternative lending space. […] It is a complicated market and a solution that brings together all information and stakeholders onto a single platform is highly compelling for both lenders & the ecosystem as a whole.”

The fintech lending space has grown rapidly in recent years, but many lenders still rely on legacy systems and manual processes that limit efficiency and scalability. Kennek aims to leverage open banking and data integration to provide lenders with a more streamlined, automated lending experience.

The seed funding will allow the London-based startup to continue developing its platform and expanding its team to meet demand from non-bank lenders looking to digitize operations. Kennek’s focus on the UK and Europe also comes amid rising adoption of open banking and open finance in the regions.

Featured Image Credit: Photo from Kennek.io; Thank you!

Radek Zielinski

Radek Zielinski is an experienced technology and financial journalist with a passion for cybersecurity and futurology.

Continue Reading

Politics

Fortune 500’s race for generative AI breakthroughs

Published

on

Deanna Ritchie


As excitement around generative AI grows, Fortune 500 companies, including Goldman Sachs, are carefully examining the possible applications of this technology. A recent survey of U.S. executives indicated that 60% believe generative AI will substantially impact their businesses in the long term. However, they anticipate a one to two-year timeframe before implementing their initial solutions. This optimism stems from the potential of generative AI to revolutionize various aspects of businesses, from enhancing customer experiences to optimizing internal processes. In the short term, companies will likely focus on pilot projects and experimentation, gradually integrating generative AI into their operations as they witness its positive influence on efficiency and profitability.

Goldman Sachs’ Cautious Approach to Implementing Generative AI

In a recent interview, Goldman Sachs CIO Marco Argenti revealed that the firm has not yet implemented any generative AI use cases. Instead, the company focuses on experimentation and setting high standards before adopting the technology. Argenti recognized the desire for outcomes in areas like developer and operational efficiency but emphasized ensuring precision before putting experimental AI use cases into production.

According to Argenti, striking the right balance between driving innovation and maintaining accuracy is crucial for successfully integrating generative AI within the firm. Goldman Sachs intends to continue exploring this emerging technology’s potential benefits and applications while diligently assessing risks to ensure it meets the company’s stringent quality standards.

One possible application for Goldman Sachs is in software development, where the company has observed a 20-40% productivity increase during its trials. The goal is for 1,000 developers to utilize generative AI tools by year’s end. However, Argenti emphasized that a well-defined expectation of return on investment is necessary before fully integrating generative AI into production.

To achieve this, the company plans to implement a systematic and strategic approach to adopting generative AI, ensuring that it complements and enhances the skills of its developers. Additionally, Goldman Sachs intends to evaluate the long-term impact of generative AI on their software development processes and the overall quality of the applications being developed.

Goldman Sachs’ approach to AI implementation goes beyond merely executing models. The firm has created a platform encompassing technical, legal, and compliance assessments to filter out improper content and keep track of all interactions. This comprehensive system ensures seamless integration of artificial intelligence in operations while adhering to regulatory standards and maintaining client confidentiality. Moreover, the platform continuously improves and adapts its algorithms, allowing Goldman Sachs to stay at the forefront of technology and offer its clients the most efficient and secure services.

Featured Image Credit: Photo by Google DeepMind; Pexels; Thank you!

Deanna Ritchie

Managing Editor at ReadWrite

Deanna is the Managing Editor at ReadWrite. Previously she worked as the Editor in Chief for Startup Grind and has over 20+ years of experience in content management and content development.

Continue Reading

Politics

UK seizes web3 opportunity simplifying crypto regulations

Published

on

Deanna Ritchie


As Web3 companies increasingly consider leaving the United States due to regulatory ambiguity, the United Kingdom must simplify its cryptocurrency regulations to attract these businesses. The conservative think tank Policy Exchange recently released a report detailing ten suggestions for improving Web3 regulation in the country. Among the recommendations are reducing liability for token holders in decentralized autonomous organizations (DAOs) and encouraging the Financial Conduct Authority (FCA) to adopt alternative Know Your Customer (KYC) methodologies, such as digital identities and blockchain analytics tools. These suggestions aim to position the UK as a hub for Web3 innovation and attract blockchain-based businesses looking for a more conducive regulatory environment.

Streamlining Cryptocurrency Regulations for Innovation

To make it easier for emerging Web3 companies to navigate existing legal frameworks and contribute to the UK’s digital economy growth, the government must streamline cryptocurrency regulations and adopt forward-looking approaches. By making the regulatory landscape clear and straightforward, the UK can create an environment that fosters innovation, growth, and competitiveness in the global fintech industry.

The Policy Exchange report also recommends not weakening self-hosted wallets or treating proof-of-stake (PoS) services as financial services. This approach aims to protect the fundamental principles of decentralization and user autonomy while strongly emphasizing security and regulatory compliance. By doing so, the UK can nurture an environment that encourages innovation and the continued growth of blockchain technology.

Despite recent strict measures by UK authorities, such as His Majesty’s Treasury and the FCA, toward the digital assets sector, the proposed changes in the Policy Exchange report strive to make the UK a more attractive location for Web3 enterprises. By adopting these suggestions, the UK can demonstrate its commitment to fostering innovation in the rapidly evolving blockchain and cryptocurrency industries while ensuring a robust and transparent regulatory environment.

The ongoing uncertainty surrounding cryptocurrency regulations in various countries has prompted Web3 companies to explore alternative jurisdictions with more precise legal frameworks. As the United States grapples with regulatory ambiguity, the United Kingdom can position itself as a hub for Web3 innovation by simplifying and streamlining its cryptocurrency regulations.

Featured Image Credit: Photo by Jonathan Borba; Pexels; Thank you!

Deanna Ritchie

Managing Editor at ReadWrite

Deanna is the Managing Editor at ReadWrite. Previously she worked as the Editor in Chief for Startup Grind and has over 20+ years of experience in content management and content development.

Continue Reading

Copyright © 2021 Seminole Press.