In subsequent years, its value grew, only to decline when the cryptocurrency market entered a bear market. Did Tesla make a profit on its Bitcoin acquisition after selling off two tranches and keeping the rest?
Tesla said in February 2021 that it had purchased $1.5 billion in Bitcoin in January 2021 and had added it to its financial records. Tesla is one of the biggest firms to include Bitcoin on its balance sheet.
Elon Musk, CEO of Tesla, was accused of a pump and dump of Bitcoin after the business said it sold $272 million worth of the cryptocurrency in the first quarter of 2021. An estimated $128 million in Bitcoin sales profits had a “positive influence” on the company’s earnings.
As of Wednesday, Tesla claimed that it had converted 75% of its Bitcoin to fiat cash during the second quarter. The corporation said that “conversions in the second quarter brought $936 million of cash to our balance sheet.”
At the conclusion of the second quarter, Tesla’s financial sheet reflected a sum of $218 million in “digital assets.” This quantity may include crypto-Dogecoin acceptable for Tesla products. Assuming the remainder is comprised solely of Bitcoin, investors may estimate how much Tesla’s initial $1.5 billion acquisition has earned and is worth now.
The addition of $272 million and $936 million equals $1,208 million. The sum of the two sales and the remaining $218 million in Bitcoin is $1.426 billion, which is about 5% less than the initial purchase price of $1.5 billion.
Using two emoticons, Musk claimed in a May 2021 tweet that Tesla had diamond hands, a metaphor for those who hang onto a depreciating asset. In both quarters in which Tesla sold Bitcoin, the proceeds contributed to the company’s profitability, a fact that Wednesday’s social media and investors could not ignore.
Based on Bitcoin’s trading range on June 30, $218 million corresponds to possible holdings between 10,823.61 and 11,632.9 BTC. Bitcoin has increased by 18 percent over the last week and since June, which may raise the value of Tesla’s holdings.
At the end of 2021, Tesla stated its remaining Bitcoin, excluding the first transaction, was worth $2 billion. Better timing of the sale would have helped Tesla, considering Bitcoin’s 52-week lows were in the same period.
Tesla has claimed in the past that it may grow or reduce its digital asset holdings “at any moment” depending on business requirements and market conditions.