Bitcoin earns $ 60,000, which means Tesla has made a lot of money

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Bitcoin traded above $ 60.00 on Saturday. That means Elon Musk’s bet on the cryptocurrency has been cleared

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more than a billion dollars.

Bitcoin, which is trading continuously on cryptocurrency exchanges, is up 5% to about $ 59,800 in Saturday morning trading. Bitcoin traded up to $ 60,409 on Saturday. This leaves the cryptocurrency growing by about 107% so far and 1,000% in the last year.

Tesla (ticker: TSLA) revealed a $ 1.5 billion investment in Bitcoin in its February annual report to the Securities and Exchange Commission. It’s hard to know exactly what Tesla paid for Bitcoin, but the prices back then were around $ 33,000.

At $ 60,000, Tesla grew about $ 1.2 billion in its trade. It is almost a new factory that could produce hundreds of thousands of Tesla vehicles a year.

Tesla spent about $ 1.3 billion on capital assets in 2019, the year it built its Shanghai facility. This is just an approximation of the cost of the new installation. Tesla spends money on other assets. Different plants in different geographies cost different amounts and do different things. Moreover, capital expenditures fluctuate from year to year. However, it demonstrates how much Tesla has earned on its crypt.

Companies always invest excess cash in short-term securities, such as treasury bills. Bitcoin is a currency-like asset, but it is very volatile, unlike the options that most corporate treasury departments would use to manage their cash balances. Bitcoin could be riskier than a treasury stock, but so far it is difficult to argue with the results.

Tesla’s market value is still low since the announcement of the Bitcoin investment. The share decreased by about 20%, from about $ 863 per share to $ 694. It removes about $ 161 billion from the company’s market capitalization.

However, risk management concerns have less to do with declining average risk. Interest rates are a bigger factor. The yield on the 10-year US Treasury note has gone from less than 1.2% to about 1.6% since the Bitcoin investment was revealed. This increase of 0.4% affected the growth stocks.

Nasdaq Composite,

hosts many companies with rich growth, is down by almost 5% in the same period.

Dow Jones Industrial Average,

for comparison, it increased by over 4%.

Higher rates hit stock markets higher than other stocks for a number of reasons. High-growth companies often need money to grow, and growth financing is more expensive in a higher-rate environment. High-growth companies also generate most of their cash flow in the future. The future cash flow is a little less valuable, relatively speaking, when investors can get higher returns from their investment dollars today.

Write to Al Root at [email protected]