Tesla makes $1bn from bitcoin purchase

Analyst: Tesla makes $1bn from bitcoin purchase

Tesla has almost made more profit from its bitcoin investment than it did from selling electric cars in 2020, according to an analyst at Wedbush Securities.

US carmaker Tesla has made massive profits from its Bitcoin (BTC) investments. According to a new report, these are said to be as high as US$1 billion.

An analyst at Wedbush Securities, a private US investment firm, has calculated that Tesla earned „about US$1 billion“ as a result of its 1.5 billion investment in Bitcoin. Daniel Ives estimated Tesla’s Bitcoin profits in Crypto Bank an investor note on Saturday, CNBC reported.

Amid Bitcoin’s parabolic rise to a market capitalisation of 1 trillion. US dollars, Ives said, „Tesla is on the verge of earning more on its Bitcoin investment than it did on sales of its electric cars in all of 2020.“

Ives noted that Tesla’s investment is likely to influence other listed companies in their decisions. „The bitcoin investment are just a business on the side for Tesla. But this was clearly a good initial investment and a trend that could have a ripple effect on other listed companies over the next 12 to 18 months,“ he wrote. However, Ives expects only a small portion of the market to follow the trend, given regulatory uncertainty:

„We still expect less than 5 percent of listed companies to follow this path until a clearer regulatory framework is established around the crypto market. By 2021, this is clearly seeing more mainstream adoption.“

It is still unclear how many Bitcoins Tesla bought

Tesla officially announced its US$1.5bn investment in Bitcoin in a filing with the US Securities and Exchange Commission (SEC) on 8 February. It is still unclear how many Bitcoins Tesla bought and at what price, as the company did not disclose this information in the SEC filing.

Given that Bitcoin was between about US$29,000 and US$37,000 in January, it could be that Tesla holds somewhere between 40,000 and 51,000 BTC. At press time, Bitcoin was at US$52,800, according to data from the Cointelegraph Bitcoin Price Index.

At the end of January, Tesla reported its first full-year profit, stating that the company had made a $721m profit in 2020 after a loss of $862m in 2019.