Tesla’s bold foray into the Bitcoin (BTC) market has paid off in 2021, as the price of BTC has rebounded in October to surpass $ 58,000 on October 14.
Tesla currently owns approximately 43,200 BTC, worth about $ 2.5 billion at current prices, according to the online monitoring resource. Bitcoin Treasury Bonds. This is about 65% or $ 1 billion more than what the automaker paid in February when Elon Musk’s company revealed which had added $ 1.5 billion in BTC to its balance sheet.
In the second quarter, Tesla sold 10% of its Bitcoin holdings, around 46,000 BTC, at a reported average price of around $ 50,000 per token. In its Second quarter earnings report, the company reported that it had recorded profits worth $ 128 million from its sale of Bitcoin.
Tesla made the first billion profit in the second quarter from car sales
Following the latest Bitcoin price rally, Tesla’s net earnings from its cryptocurrency holdings turned out to be as high as its second-quarter earnings.
In detail, Tesla reported $ 1.14 billion in net profit for the second quarter, the first time it crossed the $ 1 billion mark. The revenue was part of $ 11.96 billion in revenue that Tesla made primarily from selling cars, about $ 10.21 billion. The remaining $ 354 million came from the sale of regulatory credits.
Tesla revealed on October 1 that it had delivered 241,300 electric vehicles during the third quarter, compared to 201,250 vehicles in the previous quarter. Combined with Tesla’s Bitcoin earnings, expectations are high for the blockbuster earnings to be released after the market close on October 19.
“We believe the third quarter will be the strongest quarter in TSLA’s history.” said Piper Sandler Analyst Alexander Potter.
Will other companies follow?
So far, Tesla’s Bitcoin strategy has been very successful, providing a case study of how other companies could replace a portion of their cash reserves with BTC.
That said, several companies that invested in Bitcoin before Tesla have seen even bigger gains.
For example, business intelligence firm MicroStrategy bought around $ 3.15 billion worth of Bitcoin in multiple purchase rounds. With its first purchase dating back to August 11, 2020, the company’s Bitcoin net earnings are now close to $ 6.3 billion, nearly doubling its investment.
Jack Dorsey’s payment services company Square has also made considerable profits from holding Bitcoin, which is now worth more than $ 442 million of its $ 220 million investment.
Additionally, Canada-based cryptocurrency mining company Hut 8 Mining Corp has seen its Bitcoin purchase value of $ 39.3 million increase by more than 600%, reaching around $ 250 million. In June, the company also revealed plans to hold 5,000 BTC by 2022.
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