Tesla’s (TSLA) bold foray into the Bitcoin (BTC) market paid off in 2021 when BTC price rebounded in October to hit above $ 58,000 on October 14.
According to online monitoring resource Bitcointreasaries.net, Tesla currently holds about 43,200 BTC, valued at about $ 2.5 billion at today’s prices. That’s about 65%, or $ 1 billion, more than the automaker paid in February when Elon Musk’s company announced it 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 earnings report for the second quarter, the company announced that it had made a profit of $ 128 million from the sale of its bitcoins.
Tesla made its first $ 1 billion profit from auto sales in the second quarter
After the recent Bitcoin price rally, Tesla’s net income from its crypto holdings was on par with its second quarter profit.
Specifically, Tesla reported net income of $ 1.14 billion for the second quarter, the first time the company broke the $ 1 billion mark. Those revenues are part of the $ 11.96 billion in revenue Tesla generated primarily from sales of automobiles – about $ 10.21 billion. The remaining $ 354 million came from regulatory loan sales.
Tesla announced on October 1 that it had shipped 241,300 electric vehicles in the third quarter, compared to 201,250 vehicles in the previous quarter. Combined with Tesla’s Bitcoin earnings, expectations are high for blockbuster earnings to be announced after the market closes on October 19th.
“We believe the third quarter will be TSLA’s strongest quarter ever,” said Piper Sandler analyst Alexander Potter.
Will other companies follow suit?
Tesla’s Bitcoin strategy has been very successful so far and provides a case study of how other companies can replace part of their cash reserves with BTC.
However, some of the companies that invested in Bitcoin before Tesla achieved even higher returns.
For example, business intelligence firm MicroStrategy made multiple purchases of approximately $ 3.15 billion worth of Bitcoin. After the initial purchase was postponed on Aug. 11, 2020, the company’s net income from Bitcoin is now nearly $ 6.3 billion, almost double its investment.
Jack Dorsey’s payment services company Square also made a significant profit on its Bitcoin holdings, which are now worth more than $ 442 million from its $ 220 million investment.
Additionally, Canada-based crypto mining company Hut 8 Mining Corp has reported that its $ 39.3 million bitcoin purchases have increased more than 600% to around $ 250 million. In June, the company also announced plans to hold 5,000 BTC through 2022.