Tesla and Bitcoin Reloaded
How is it a month later?
Meanwhile, it is well known — thanks to Twitter and Media Coverage — Tesla bought Bitcoins.
Tesla deployed 1.5 billion dollars in Bitcoin in January 2021 —and the company disclosed it in the annual report for the year 2020.
I couldn’t track down the exact purchase date or the price, but I made some assumptions to answer my most pressing question:
What impact will this move have on Tesla's long-term profitability?
If I were responsible for investing 1.5 billion in Bitcoin, I would buy it over a longer time period and not all in one go.
Bitcoin has a market capitalization of about 1 trillion dollars, and still, 1.5 billion could have a pricing effect when it is deployed all at once, just at a time slot when not much is going on in the market.
So my strategy would be to buy over 30 days using the ups and downs.
Let’s assume this purchase happened from December 2020 to January 2021.
The price in that period ranged from 18,000 to 32,000 dollars per bitcoin.
To make things, easy let's assume a price of 32,000 dollars on average at the time of the purchases, which would result in a purchase of
46,875 BTC
This number isn’t perfect for presentations as I consider it too complex for the audience to memorize it easily.
Let us pretend further, Tesla bought
50,000 BTC
It won’t change the principle of the example and sticks in mind very easily.
At the peak point of the most recent bitcoin rally, the price of 1 BTC was
58,000 Dollars
Under these assumptions, in total and retrospect, it sums up to an astonishing
2,900,000,000 dollars value [or 2,900 million]
Elon Musk almost doubled his investment in less than a month, putting an extra 1.4 billion dollars into Tesla’s cash position.
The funny thing is that Tesla’s 2020 net profit reported in the latest financial statement was
721 million dollars
A profit created by Tesla’s core business. And obviously in retrospect, in February 2021, Tesla most likely made
twice as much virtual profit from holding bitcoin.
Is this sustainable, or will it only have been a single moment in time good enough for this article?
Nobody can predict the market, and time will tell….
Since 1999 I am an executive, advisor, and coach for companies in various industries. I am specialized in Corporate Development and Finance, from seed rounds to IPO level, and focused on life science since 2006.
