Tesla Ing (NASDAQ: TSLA) made headlines earlier this month by announcing that it had bought $ 1.5 billion in Bitcoin. The move raised the cryptocurrency higher and also yielded an impressive profit for the electric vehicle manufacturer.
What happened: Bitcoin reached $ 50,000 for the first time ever on Tuesday and continued a rally in 2021 that sent the largest cryptocurrency higher due to increasing adoption and public companies calling the future.
Tesla bought $ 1.5 billion in Bitcoin in January, although the company did not disclose its average purchase price of how much Bitcoin it owns.
Related Link: Can Tesla Plan Bitcoin as Treasury Reserve?
Profits from Bitcoin: In January, Bitcoin traded between $ 29,333 and $ 37,020. A purchase of $ 1.5 billion allowed Tesla to get between 37,020 and 51,137 Bitcoin. The average will come out to 44,079 Bitcoin.
Based on these scenarios, the value of Tesla’s Bitcoin is worth the next with the current Bitcoin price of $ 48,450.
- 51,137 Bitcoin: $ 2.48 billion, profit of $ 0.98 billion
- 44,079 Bitcoin: $ 2.14 billion, $ 0.64 billion profit
- 37,020 Bitcoin: $ 1.79 billion, profit of $ 0.29 billion
Why it’s important: Tesla’s Bitcoin purchase has created the validation of the cryptocurrency for some and is seen as a springboard for other listed companies to take a similar step as well. The gain on the Bitcoin purchase is also remarkable, as it could be more than Tesla made from its entire business in fiscal 2020.
Tesla reported its first profitable year in fiscal 2020 with $ 721 million, which came after a loss of $ 862 million in fiscal 2019. Tesla reported only a few quarterly gains before fiscal 2020.
Given the years of net losses due to its business, it is possible that Tesla made more profit from its single $ 1.5 billion Bitcoin purchase than the profits of its cars over the past decade.
Time will tell how much Bitcoin Tesla owns and whether the company plans to hold for long term or sell some for profit.
TSLA Price Action: Shares of Tesla fell 2% to $ 796.22 on Tuesday.
© 2021 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.