Elon Musk is always making controversial decisions and getting himself and Tesla into the media.
And Tesla’s decision to buy $1.5 billion in Bitcoin, obviously led by Musk, was one such decision.
Was it a good decision? And what was the logic behind it?
Tesla’s Bitcoin Profit
No one knows the exact price Tesla bought their Bitcoin for, but it is somewhere around $35-$36,000 per bitcoin.
The price at the time of writing is approximately $50,000 per bitcoin. So, Tesla has made around 40% profit.
Bitcoin has actually reached all time highs in 2021 of $67,500 which is almost an 85% profit.
Of course, it is a lot more complex than this because Tesla has taken some bitcoin payments earlier in the year and also sold around 10% of their initial holding too. Tesla made a $128 million profit on the Bitcoin they sold in March of 2021.
Either way, as the price of Bitcoin continues to rise over the longterm, Tesla’s bitcoin profit will rise.
Tesla’s Bitcoin Loses
Owing to the way that GAAP accounting works, Tesla has to recognise loses in its Bitcoin holding if it drops below their purchase price at any time in a given financial quarter.
And, because Bitcoin is so volatile, it has actually dropped below their Bitcoin purchase price during two quarters in 2021.
Tesla has actually recognised loses on their Bitcoin holdings of $51 million and $101 million
How Many Bitcoins Does Tesla Have?
Tesla does not list the exact number of Bitcoins it has, but instead lists the worth of their Bitcoin holding at each quarter end.
In their Q3 2021 filing Tesla stated:
The fair market value of our bitcoin holdings as of September 30, 2021 was $1.83 billionTesla
Given that Bitcoin was valued at $43,790.89 at market close on that day we can estimate that Tesla hasAs such, the estimated holding of Tesla in Bitcoin is around 41,789.5 Bitcoins.
Does Tesla Take Bitcoin Payments?
Tesla started taking Bitcoin payments at the same time they purchased bitcoin back in February 2021.
However, owing to the amount of coal power that was being used by bitcoin at the time, Tesla suspended this practice in May 2021.
Bitcoin has since become a lot more green, and much of the servers used for Bitcoin have left China which was using a lot of coal power at the time.