Tesla’s (TSLA) daring foray into the Bitcoin (BTC) market paid off in 2021 as BTC prices rose in October to over $ 58,000 on October 14.
Tesla currently holds around 43,200 BTC, worth around $ 2.5 billion at current prices, according to online monitoring resource Bitcointreasuries.net. That’s about 65% or $ 1 billion more than what the automaker paid in February when Elon Musk’s company revealed it had added $ 1.5 billion in BTC to its balance sheet.
In the second quarter, Tesla sold 10% of its Bitcoin holdings – around 46,000 BTC – at a reported average price of around $ 50,000 per token. In its second quarter earnings report, the company said it recorded gains worth $ 128 million on its sale of Bitcoin.
Tesla Earned First Billion Second Quarter Profits From Car Sales
After the latest Bitcoin price rebound, Tesla’s net profits on its crypto holdings are equivalent to its second quarter earnings.
In detail, Tesla had announced a net profit of $ 1.14 billion in the second quarter, the first time it crossed the billion dollar mark. The income was part of the $ 11.96 billion in revenue that Tesla made primarily from selling cars – roughly $ 10.21 billion. The remaining $ 354 million came from regulatory credit sales.
Tesla revealed on October 1 that it delivered 241,300 electric vehicles in the third quarter, up from 201,250 vehicles in the previous quarter. Combined with Tesla’s Bitcoin profits, expectations are high for blockbuster profits which are expected to be released after the market closes on October 19.
“We believe the third quarter will be TSLA’s strongest quarter on record,” said Alexander Potter, analyst at Piper Sandler.
Will other companies follow?
Tesla’s Bitcoin strategy so far has been very successful, providing a case study on how other companies could replace some of their cash reserves with BTC.
That said, several companies that invested in Bitcoin before Tesla saw even bigger gains.
For example, business intelligence firm MicroStrategy bought roughly $ 3.15 billion worth of Bitcoin in multiple rounds of buying. With its first purchase on August 11, 2020, the company’s net profits in Bitcoin now stand at nearly $ 6.3 billion, nearly doubling its investment.
Square, Jack Dorsey’s payment services company, has also made huge gains by owning Bitcoin, which is now worth more than $ 442 million on its $ 220 million investment.
Additionally, the Canadian cryptocurrency mining company, Hut 8 Mining Corp, saw its purchase value of $ 39.3 million in Bitcoin increase by more than 600%, reaching around $ 250 million. In June, the company also revealed its intention to hold 5,000 BTC by 2022.
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