Tesla, led by Elon Musk, confirmed that it bought about $ 1.5 billion in bitcoin in January and expects to start accepting it as payment in the future.
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Tesla has made about $ 1 billion in paper profits from its investments in bitcoin, according to Daniel Ives, an analyst at Wedbush Securities.
The company is “on a trajectory to make more of Bitcoin’s investments than profits from the sale of its EV (electric vehicle) cars throughout 2020,” Ives said in a note released Saturday.
Earlier this month, the US electric vehicle maker revealed in a Securities and Exchange Commission statement that it had bought $ 1.5 billion worth of bitcoin for “more flexibility to diversify and maximize cash returns.”
The purchase was made some time in January, the company said without revealing when or at what price it bought bitcoin. It is unclear whether Tesla still sold any bitcoin.
Bitcoin has seen a huge rally this year, regularly breaking new records. The market value of Bitcoin exceeded 1 trillion dollars for the first time last week, and the cryptocurrency increased by 94% compared to last year.
Ives did not explain how he came up with 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 released its note.
This represents an increase of about 65%, which would bring the profit of Tesla’s bitcoin investment of 1.5 billion dollars to about 975 million dollars. Based on the maximum level of $ 58,332.36 on Monday, that profit would exceed $ 1 billion.
“Although the Bitcoin investment is a side show for Tesla, it was clearly a good initial investment and a trend we expect could have a repeated impact on other public companies over the next 12-18 months,” Ives said.
Tesla CEO Elon Musk is a supporter of digital currencies. He recently said that Bitcoin is “simply a less stupid form of liquidity than cash.”
But he also wrote on Twitter on Saturday that the price of bitcoin and another digital currency ethereum “seem high.”