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

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Bitcoin traded above $ 60.00 on Saturday. This means that Elon Musk’s bet on the cryptocurrency was achieved

Tesla

more than a billion dollars.

Bitcoin, which trades continuously on cryptocurrency exchanges, rose 5% to about $ 59,800 in trading Saturday morning. Bitcoin traded up to $ 60,409 on Saturday. This allows the cryptocurrency to be around 107% so far and 1,000% over the past year.

Tesla (ticker: TSLA) revealed a $ 1.5 billion investment in Bitcoin in its annual report, which was submitted to the Securities and Exchange Commission in February. It is difficult to know exactly what Tesla paid for Bitcoin, but the prices at the time were about $ 33,000.

At $ 60,000, Tesla is about $ 1.2 billion higher. It is almost a new factory that can produce hundreds of thousands of Tesla vehicles a year.

Tesla spent about $ 1.3 billion on capital assets in 2019, the year it set up its Shanghai facility. This is only an approximation of the construction costs. Tesla spends money on other assets. Different plants in different geographical areas cost different amounts and do different things. What’s more, capital expenditure varies from year to year. It still shows how much Tesla earned on its crypto bet.

Companies always invest excess cash in safe, short-term securities such as treasury accounts. Bitcoin is a currency-like asset, but it is very volatile, unlike options that most treasury departments have used to manage their cash balances. Bitcoin may be more risky than a treasury bill, but so far it has been difficult to argue with the results.

Tesla’s market value has been lower since the Bitcoin investment was announced. The stock fell by about 20%, from about $ 863 per share to $ 694. It wipes about $ 161 billion from the company’s market capitalization.

However, concern as a risk manager than average cash management has little to do with the decline. Interest rates are a bigger factor. Yields on the U.S. 10-year treasury note have risen from less than 1.2% to about 1.6% since the announcement of the Bitcoin investment. The 0.4% rise has hurt growth stocks.

The

Nasdaq Compound,

home to many richly valued growth companies, is almost 5% lower than the same period. The

Dow Jones Industrial Average,

by comparison, it is more than 4% higher.

Higher rates are hitting more growth than other stocks for some reason. High growth businesses often need money to grow and financing growth is more expensive in a higher rate environment. High-growth businesses also generate the bulk of their cash flow far into the future. Future cash flows are relatively a little less valuable as investors today can earn higher returns on their investment dollars.

Write to Al Root at [email protected]