Ever since Tesla bought Bitcoin worth $1.5 billion, they are hitting the news as a duo. According to Daniel Ives, an analyst at Wedbush Securities, the company has made $1 billion in paper profits. On Saturday, in a note, Ives stated, “The Company is on a trajectory to make more from its Bitcoin investments than profits from selling its EV (electric vehicle) cars in all of 2020.”
The U.S. carmaker disclosed in a Securities and Exchange Commission filing that it bought $1.5 billion worth Bitcoin. Earlier this month, it stated that this investment was made for “more flexibility to further diversify and maximize returns on our cash.”
Without disclosing the exact time, date, or price of the Bitcoin, Tesla said they bought it in January. It is unknown whether any of the Bitcoin has been sold yet. The cryptocurrency has touched fresh record highs regularly in its vast rally this year. For the first time last week, Bitcoin’s market value topped $1 trillion. The cryptocurrency is up 94% year-to-date.
According to CoinDesk data, Bitcoin’s price has gone from an intraday high of $34,793.45 on 31st January to $57,487.03 on 20th February. There has been a rise of about 65%. Tesla would be at a profit of around $975 million on the $1.5 billion investment.
Ives said, “While the Bitcoin investment is a sideshow for Tesla, it’s clearly been a good initial investment and a trend we expect could have a ripple impact for other public companies over the next 12 to 18 months.” Being a proponent of digital currencies, Tesla CEO Elon Musk said that Bitcoin is only a less dumb form of liquid cash.