Tesla has made about $1 billion in profit on its bitcoin investment, analyst estimates

PUBLISHED: Mon, 22 Feb 2021 08:50:00 GMT
Arjun Kharpal
CNBC
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Key Points
  • Tesla has made roughly $1 billion in paper profits from its investment into bitcoin, according to Daniel Ives, analyst at Wedbush Securities estimated.
  • 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,” Ives said in a note published Saturday.
  • This month, Tesla disclosed in a Securities and Exchange Commission filing that it had bought $1.5 billion worth of bitcoin.
Illustrative image of a commemorative bitcoin in front of the Tesla car logo. Tesla, led by Elon Musk, confirmed that it purchased about $ 1.5 billion in bitcoin in January and expects to start accepting it as a payment in the future. On Monday, February 8, 2021, in Dublin, Ireland. (Photo by Artur Widak/NurPhoto via Getty Images)

Tesla has made roughly $1 billion in paper profits from its investment into bitcoin, according to Daniel Ives, analyst at Wedbush Securities.

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,” Ives estimated in a note published Saturday.

Earlier this month, the U.S. electric carmaker disclosed in a Securities and Exchange Commission filing that it had bought $1.5 billion worth of bitcoin for “more flexibility to further diversify and maximize returns on our cash.”

The purchase was made some time in January, the company said without disclosing when or at what price it bought bitcoin for. It’s unclear if Tesla has sold any of the bitcoin yet.

Bitcoin has seen a huge rally this year, touching fresh record highs regularly. Bitcoin’s market value topped $1 trillion for the first time last week, and the cryptocurrency is up 94% year-to-date.

Ives did not explain how he got to that calculation. But according to CoinDesk data, bitcoin’s price has gone from an intraday high of $34,793.45 on Jan. 31 to an intraday high of $57,487.03 on Feb. 20, the day Ives published his note.

That’s a rise of about 65%, which would put the profit on Tesla’s $1.5 billion bitcoin investment at around $975 million. Based on Monday’s intraday high of $58,332.36, that profit would be over $1 billion.

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“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,” Ives said.

Tesla CEO Elon Musk is a proponent of digital currencies. He recently said bitcoin is “is simply a less dumb form of liquidity than cash.”

But he also tweeted on Saturday that the price of bitcoin and another digital currency ethereum do “seem high.”