Since Elon Musk authorized the acquisition of Tesla’s Bitcoin holdings in February, the cryptocurrency’s value has yielded a $1 billion profit. Tesla’s risky entry into the Bitcoin (BTC) marketplace has started paying off in 2021, as the value of Bitcoin has been rising steadily in October, reaching a high of more than $58,000 on October 14.
Per the Bitcoin Treasuries, an online tracking resource, Tesla presently owns around 43,200 Bitcoins, which are worth over $2.5 billion at today’s values. This is around 65 percent or $1 billion higher than the amount paid by the carmaker in February after Elon Musk’s business announced that it had introduced $1.5 billion in Bitcoin to its financial sheet.
Tesla sold over 46,000 Bitcoins (about 10% of its total Bitcoin holdings) in the second quarter of this year, at an estimated average price of nearly $50,000 per token. As part of its second-quarter financial report, the corporation disclosed that it had realized gains of $128 million from the selling of Bitcoin.
Tesla Got Its First Billion Selling Vehicles In Q2
Following the recent recovery in the Bitcoin price, Tesla’s operating earnings from its cryptocurrency holdings equaled the company’s revenue for the second quarter. In more detail, Tesla recorded a net profit of $1.14 billion for the second quarter, marking the first time the company had ever exceeded the $1-billion threshold. The profit was a portion of Tesla’s $11.96 billion in revenue, which was mostly generated by the sale of automobiles — approximately $10.21 billion. The other $354 million was generated through the selling of regulatory credits.
Tesla announced on Oct. 1 that it had sold 241,300 electric cars during the third quarter of the year, up from 201,250 automobiles delivered in the past quarter of the year. Combining this with Tesla’s Bitcoin profits, investors have high expectations for the company’s spectacular earnings report, which will be announced after the market closes on October 19. “We believe that Tesla will have its best quarter ever in the third quarter,” said Piper Sandler expert Alexander Potter.
Will It Inspire Others?
So far, Tesla’s Bitcoin approach has been extremely effective, and the company has served as a case study for other corporations interested in replacing a percentage of their liquid assets with Bitcoin. However, numerous firms that made investments in Bitcoin before Tesla has received even bigger returns on their investments.
For example, the business analytics firm MicroStrategy purchased over $3.15 billion worth of Bitcoin throughout several purchasing rounds. As of August 11, 2020, the company’s net Bitcoin earnings had reached $6.3 billion, nearly doubling its original cost. The firm’s initial purchase was made on August 11, 2010.
Square, the payment processing company founded by Jack Dorsey, has also witnessed significant profits from its Bitcoin holdings, which are currently worth more than $442 million after a $220 million investment. Additionally, the value of Hut 8 Mining Corp’s $39.3 million Bitcoin acquisition has increased by more than 600 percent, bringing the total value of the purchase to approximately $250 million. In addition, the corporation announced plans to keep 5,000 Bitcoins by the end of 2022.