Tesla, led by Elon Musk, confirmed it bought around $ 1.5 billion worth of bitcoin in January and expects it to be accepted as payment in the future.
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Daniel Ives, an analyst at Wedbush Securities, said Tesla has made approximately $ 1 billion in paper profits from its investment in Bitcoin.
The company is “on track to get more out of its Bitcoin investments than profits from sales of its EV (electric) vehicles throughout 2020,” said Ives in a note posted on Saturday.
Earlier this month, the US electric car maker announced in a filing from the Securities and Exchange Commission that it had purchased $ 1.5 billion in Bitcoin to “give it more flexibility to further diversify and maximize returns of our cash “.
The purchase was made for some time in January with no announcement of when or at what price Bitcoin was purchased. It is unclear whether Tesla was still selling Bitcoin.
Bitcoin has seen a major rally this year, regularly reaching new record highs. Bitcoin’s market value topped $ 1 trillion for the first time last week, and the cryptocurrency is up 94% since the start of the year.
Ives did not explain how he came up with this calculation. According to CoinDesk data, the price of Bitcoin rose from an intraday high of $ 34,793.45 on January 31st to an intraday high of $ 57,487.03 on February 20th, the day Ives posted his note.
That’s an increase of around 65%, which would bring the gain on Tesla’s $ 1.5 billion Bitcoin investment to around $ 975 million. Based on Monday’s intraday high of $ 58,332.36 that gain would be over $ 1 billion.
“While the Bitcoin investment is a sideline for Tesla, it was clearly a good initial investment and a trend that we expect could affect other public companies in the next 12 to 18 months,” said Ives.
Elon Musk, CEO of Tesla, is a digital currency advocate. He recently said Bitcoin was “just a less stupid form of liquidity than cash”.
But he also tweeted on Saturday that the price of Bitcoin and another Ethereum appears to be “high” for digital currencies.