Tesla Inc., led by CEO Elon Musk, has continually sought new ways to innovate and use the latest technology. This is manifesting itself in many ways, from self-driving cars to commercial solar panels. But one of the less-discussed examples of Tesla using new technology is its investment in Bitcoin.
Musk is known to be a supporter of cryptocurrencies, constantly posting about them on social media and accepting some types of cryptocurrencies as payment for Tesla products. However, Musk followed through on his word in 2021, making a then-unprecedented investment in Bitcoin (BTC).
Do not miss it:
In February 2021, Tesla spent $1.5 billion to purchase approximately 43,000 BTC at an average cost of approximately $38,000. Tesla used its excess cash to buy and profit from low interest rates and high inflation.
After the investment was announced, the price of Bitcoin quickly skyrocketed to nearly $50,000, and Tesla's Bitcoin holdings reached $2.65 billion by mid-March 2021. By the end of March, BTC had risen to $60,000, prompting Tesla to sell some of its Bitcoin. its position. Tesla was able to sell his 10% of the position, or 4,320 BTC, and earn about $250 million in proceeds.
The company made no other moves to its Bitcoin holdings until June 2022. From March 2021 to June 2022, the company held approximately 39,000 BTC, and the value of its position decreased to $875 million in June 2022.
At this point, Tesla sold most of its BTC holdings. Sold 29,160 BTC at an average price of around $20,000. According to Musk, the sale served multiple purposes, including proving that BTC could handle large-scale transactions and giving Tesla additional cash during the recession.
This sale could not have come at a worse time. Bitcoin hit an 18-month low shortly after the sale, but has since risen more than 350% in the 16 months since.
In 2024, the price of Bitcoin rose to $73,750. If Tesla had HODLed his original investment of 43,200 BTC, it would have been worth around $3.2 billion at the all-time high set in 2024. That's a gain of more than 100%, or more than $1.55 billion. Instead, Tesla holds less than 10,000 BTC, worth about $700 million.
By holding the tokens, Tesla would not have had to pay capital gains taxes on its first Bitcoin sale in March 2021.
Tesla may have had a bad trade with Bitcoin, but the price has risen so much since then that the cumulative profit and loss on Bitcoin trades is close to zero. If Bitcoin continues to rise, Tesla could succeed again.
Read next:
“The Active Investor's Secret Weapon'' Step up your stock market game with the #1 News & Everything else trading tool: Benzinga Pro – Click here to start your 14-day trial now!
Want the latest stock analysis from Benzinga?
This article shows how much money Tesla could have made in Bitcoin if it had been HODLed.
© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.
