Tesla Inc (NASDAQ: TSLA) made waves earlier this month by announcing it had purchased $1.5 billion in Bitcoin. The move sent the cryptocurrency higher and has also turned in some impressive profits for the electric vehicle maker.
What Happened: Bitcoin hit $50,000 for the first time ever on Tuesday, continuing a 2021 rally that has sent the largest cryptocurrency higher on increased adoption and public companies placing bets on the future.
Tesla purchased $1.5 billion in Bitcoin in the month of January, although the company hasn’t revealed its average purchase price of how many Bitcoin it holds.
Gains From Bitcoin: In the month of January, Bitcoin traded between $29,333 and $37,020. A $1.5-billion purchase could have gotten Tesla anywhere between 37,020 and 51,137 Bitcoin. The average would come out to 44,079 Bitcoin.
Based on these scenarios, the value of Tesla’s Bitcoin is worth the following with the current Bitcoin price of $48,450.
51,137 Bitcoin: $2.48 billion, profit of $0.98 billion
44,079 Bitcoin: $2.14 billion, profit of $0.64 billion
37,020 Bitcoin: $1.79 billion, profit of $0.29 billion
Why It’s Important: Tesla’s Bitcoin purchase created validation of the cryptocurrency for some and is seen as a stepping stone for other publicly traded companies to also make a similar move. The gain on the Bitcoin purchase is also notable as it may be more than Tesla made from its entire business in fiscal 2020.
Tesla reported its first profitable year in fiscal 2020 with $721 million, which came after a loss of $862 million in fiscal 2019. Tesla reported only a couple of quarterly profits prior to fiscal 2020.
Given the years of net losses from its business, it’s possible Tesla made more in profit off of its single $1.5 billion Bitcoin purchase than it did off the profits from its cars in the last decade.
Time will tell how many Bitcoin Tesla owns and if the company is planning to hold for the long haul or will sell some for profits.
TSLA Price Action: Shares of Tesla were down 2% to $796.22 on Tuesday.