Tesla made $ 1 billion profit on its bitcoin investment: Analyst

Tesla made about $ 1 billion in paper profits from its investment in bitcoin, according to Daniel Ives, an analyst at Wedbush Securities.

The company is “on a path to profit more from its investments in Bitcoin than profits from the sale of its EV (electric vehicle) cars throughout the year 2020,” estimated Ives in a note published Saturday.

Earlier this month, the U.S. electric car maker disclosed in a Securities and Exchange Commission document that it bought $ 1.5 billion in bitcoin for “more flexibility to diversify and maximize the return on our cash.”

The purchase was made sometime in January, the company said, without disclosing when or at what price it bought bitcoin. It is not clear whether Tesla has ever sold any bitcoin.

Bitcoin has had a big rally this year, reaching new records on a regular basis. Bitcoin’s market value reached $ 1 trillion for the first time last week, and the cryptocurrency has increased 94% year-to-date.

Ives did not explain how he came to this calculation. But, according to CoinDesk data, the price of bitcoin went from an intraday high of $ 34,793.45 on January 31 to an intraday high of $ 57,487.03 on February 20, the day Ives published his note.

That’s an increase of about 65%, which would put the profit on Tesla’s $ 1.5 billion investment in bitcoins at around $ 975 million. Based on Monday’s intraday high of $ 58,332.36, that profit would be in excess of $ 1 billion.

“While investing in Bitcoin is a separate show for Tesla, it is clearly a good initial investment and a trend that we hope will have an impact on waves for other public companies in the next 12 to 18 months,” said Ives.

Tesla CEO Elon Musk is an advocate for digital currencies. He said recently that bitcoin is “simply a less stupid form of liquidity than money”.

But he also tweeted on Saturday that the price of bitcoin and another ethereum digital currency “looks high”.