Tesla Inc (NASDAQ: TSLA) caused a sensation earlier this month by announcing that it had purchased $ 1.5 billion in Bitcoin. The move elevated the cryptocurrency and also generated impressive profits for the electric vehicle maker.
What happened: Bitcoin reached $ 50,000 for the first time on Tuesday, continuing a 2021 high that raised the largest cryptocurrency, increasing adoption and public companies placing bets in the future.
Tesla bought $ 1.5 billion in Bitcoin in January, although the company has not revealed its average purchase price for how many Bitcoin it owns.
Related link: Is Tesla planning Bitcoin as a treasury reserve?
Bitcoin earnings: In January, Bitcoin traded between $ 29,333 and $ 37,020. A $ 1.5 billion purchase could have led Tesla to somewhere between 37,020 and 51,137 Bitcoin. The average would come out to 44,079 Bitcoin.
Based on these scenarios, Tesla’s Bitcoin value 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
Because it’s important: Tesla’s Bitcoin purchase created cryptocurrency validation for some and is seen as a stepping stone for other publicly traded companies to also make a similar move. The gain in buying Bitcoin is also notable, as it may be more than Tesla earned with all of its business in fiscal 2020.
Tesla reported its first profitable year in fiscal year 2020 with $ 721 million, which came after a loss of $ 862 million in fiscal year 2019. Tesla reported only a few quarterly earnings before fiscal year 2020.
Given the years of net losses from its businesses, it is possible that Tesla profited more from its single $ 1.5 billion Bitcoin purchase than from its car profits in the past decade.
Time will tell how many Bitcoin Tesla it owns and whether the company is planning to keep them in the long run or sell some to make a profit.
TSLA price action: Tesla’s shares fell 2% to $ 796.22 on Tuesday.
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