Tesla’s venture into the bitcoin markets earlier this year has paid dividends with unrealized gains topping a billion dollars at current prices.
Elon Musk took a huge gamble when his firm Tesla purchased $1.5 billion worth of bitcoin back in January. At the time of purchase, it was estimated that BTC was trading in the low $30,000 zone.
Tesla sold around 10% of its bitcoin stash in Q2 in a move that boosted that quarter’s earnings by $272 million. The company still holds an estimated 43,200 BTC according to BitcoinTreasuries.
That remaining BTC is now worth an estimated $2.8 billion giving the company an unrealized profit of $1.3 billion. The value of its holdings has increased 86% since that initial purchase.
Tesla is the second-largest corporate holder of bitcoin behind MicroStrategy which holds 114,041 BTC worth an estimated $7.4 billion at current prices.
No more BTC purchases in Q3
According to its third-quarter financial report, Tesla’s total revenue grew 57% year-on-year for the period. It reported revenue of $13.7 billion for the period translating into a gross profit of $3.6 billion, up 77% YoY. Tesla attributed this growth to vehicle volume growth and cost reduction.
Notably, there were no further bitcoin purchases for the period. The company took an impairment charge of $51 million in the third quarter to account for its existing BTC holdings.
Digital asset accounting rules state that if the price of an asset falls during the quarter, a company must report it as impairment. However, if the price increases it is not reported as a gain on the balance sheet.
Q3 would have been a good time to load up on more BTC since prices plunged to a low of around $30,000 in mid-July. Prices are currently up 116% from those lows and have just printed a new all-time high.
Tesla and its enigmatic CEO have been instrumental in market volatility this year with retail traders reacting to the latest tweet or company announcement.
Bitcoin cools from ATH
Bitcoin prices are currently cooling off from their highest ever levels. On Oct 20, BTC tapped $67,000 to print a new all-time high.
It’s currently trading at a little over $66,000, which was almost exactly its opening price on the day. BTC has now made more than 50% over the past month and an impressive 124% since the beginning of the year.
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