Exactly one year after Tesla announced its investment of $1.5 billion in Bitcoin, the company has disclosed that the return has been very fruitful.
The outcome of Tesla’s investment in Bitcoin
On Monday, Tesla released its 10-K, a detailed annual report that all public companies must file with the SEC. The document shows how as of 31 December, the company had earned $128 million by selling some of the Bitcoin it had purchased, while its capital appreciation would have fallen by $101 million, thus making a net profit of $27 million.
But beyond the raw balance sheet numbers, the gain for Tesla in the purchase of the digital asset, in which it would have invested about 10% of its liquid assets, would be much more positive, thanks in part to the rules on stock market valuations established by Wall Street regulators. As of 31 December, the gain on paper from the investment would actually amount to $599 million, as stated in a company note.
“During the year ended December 31, 2021, we purchased and received $1.50 billion of bitcoin. During the year ended December 31, 2021, we recorded $101 million of impairment losses on such digital assets. We also realized gains of $128 million in connection with selling a portion of our holdings in March 2021. Such gains are presented net of impairment losses in Restructuring and other in the consolidated statement of operations. As of December 31, 2021, the carrying value of our digital assets held was $1.26 billion, which reflects cumulative impairments of $101 million. The fair market value of such digital assets held as of December 31, 2021 was $1.99 billion”.
That valuation was computed on the price of Bitcoin on 31 December around $46,000, so now that the price is hovering around $44,000, the valuation would be slightly down on paper, but compared to the time of purchase the gain would still be very substantial.
According to many experts, Tesla’s note on its investment in Bitcoin, would have contributed to the rise of the digital currency, which has gained 9% in recent hours, rising to about $45,000, after the big drops at the beginning of the year.
According to Daniel Ives, an analyst at investment firm Wedbush Securities, Tesla would actually make about $1 billion in paper profits from its investment in Bitcoin:
“The company is “on a trajectory to make more from its Bitcoin investments than profits from selling its EV (electric vehicle) cars in all of 2020”.
Last June, Elon Musk announced that Tesla would resume accepting Bitcoin as a form of payment.
Tesla in the top 3 of companies holding Bitcoin
Tesla would be the second largest publicly traded company to hold Bitcoin, according to Bitcoin Treasuries. It has 43,200 BTC, one-third of the 125,051 BTC held by Michael Saylor’s MicroStrategy.
Third on the podium of publicly traded companies holding Bitcoin is mining company Marathon Digital Holdings, which holds 8,133 BTC. Unlike the first two, MARA is actually involved in the Bitcoin industry, while MicroStrategy is involved in producing software for companies and Tesla has become the quintessential electric car brand. A sign that Bitcoin has become attractive to every business.