Electric vehicle maker Tesla has provided the periodic update to shareholders which reveals revenues of $272 million from the sale of part of the Bitcoins purchased in early February for a profit of approximately $102 million. Elon Musk (photo ©Dan Taylor / Heisenberg Media) repeatedly showed he believes in cryptocurrencies, and at the end of March announced the possibility of buying a Tesla car by paying in Bitcoin. Musk also owns Bitcoin in his personal assets and promoted Dogecoin several times as well.
In February 2021, Tesla invested approximately $1.5 billion in Bitcoin. This move caused mixed reactions, not least because the blockchain, which is the technology behind this cryptocurrency, requires a lot of power for mining and for transactions. That electricity is certainly not completely produced using sustainable sources, so the use of cryptocurrencies seems to get along poorly with a sustainability-oriented company. Of course, similar objections could be made regarding the power needed to handle transactions in banks and credit card circuits of regular currencies.
Thinking about the purely financial side, the first results of Tesla’s investment are certainly positive, with a profit of about $102 million obtained by selling 10% of the company’s assets in Bitcoin. This profit represents a significant portion of the company’s net income in the first quarter of 2021, which was $438 million. For Tesla, this shows that Bitcoin can be a viable alternative to holding cash on the balance sheet.
Elon Musk stated that the sale involved part of Tesla’s Bitcoin assets, not his personal cryptocurrency assets. That’s an answer to accusations of pumping up the value of cryptocurrencies with his statements and then selling them to make profits on them. Musk is seen as one of the architects of the enormous growth in the value of Dogecoin, a cryptocurrency created as a joke whose value has grown enormously over the course of 2021.
For now, Tesla’s bet on Bitcoin proves to be a winner and shows that cryptocurrencies can represent a real possibility for companies. Recently, there was a sharp decline in their value after the announcement by the new American president Biden of new regulations, and especially of possible taxes, for cryptocurrencies, but after some difficult days, in the cryptocurrency market, the growth trend is back.