Daniel Ives, an analyst at Wedbush Securities, has estimated that Tesla’s $1.5 billion bet on bitcoin has made it roughly $1 billion in profits as the price of the flagship cryptocurrency goes up.
According to CNBC, Ives wrote that 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,” but did not reveal how he got to those figures.
The analyst added that Tesla’s move is likely going to affect other publicly traded companies, which may soon add bitcoin to their balance sheets as well. Ives wrote:
While the Bitcoin investment is a side show for Tesla, it’s clearly been a good initial investment and a trend we expect could have a ripple impact for other public companies over the next 12 to 18 months.
Tesla revealed it invested $1.5 billion in bitcoin in its latest annual report filed with the U.S. Securities and Exchange Commission and pointed out the firm’s investment was made for “more flexibility to further diversify and maximize returns on our cash.”
The purchase was made some time in January, but Tesla did not reveal when nor at what price it bought BTC for. It’s unclear how much BTC Tesla is currently holding, but some estimates suggest anywhere between 40,000 and 51,000 as the purchase was made when bitcoin was trading between $29,000 and $37,000.
Bitcoin has reached a new all-time high above $58,000, which would imply a profit of $1 billion based on Tesla’s potential entry into the market. A website tracking corporations investing in bitcoin estimates Tesla bought 48,000 BTC, which would now be worth $2.58 billion.
Tesla has also revealed it may start accepting cryptocurrency payments. The company has, in late January, reported its first full-year profit, earning $721 million in 2020 after losing $862 million in 2019.
Featured image via Pixabay.