“During the three months ended March 31, 2021, we purchased and received $1.50 billion of bitcoin,” Tesla said, adding:
“During the three months ended March 31, 2021, we recorded $27 million of impairment losses on bitcoin. We also realized gains of $128 million through sales during the three months ended March 31, 2021. Such gains are presented net of impairment losses in Restructuring and other in the consolidated statement of operations.
As of March 31, 2021, the carrying value of our bitcoin held was $1.33 billion, which reflects cumulative impairments of $27 million. The fair market value of bitcoin held as of March 31, 2021 was $2.48 billion.”
Tesla bought $1.5 billion worth of bitcoin in February when its price was about $40,000. It obviously bought them before announcing, so if we say an average price of $35,000, that means they bought 42,000 bitcoins.
The company accountants keep track of the rise or fall in the value of this 42,000, so this impairment loss seems to be more a paper loss.
Also the mentioned $128 million above refers to the $1.5 billion they put into bitcoin. Later on they reveal the current price, stating:
“In the first quarter of 2021, we also sold an aggregate $272 million in bitcoin. Net of such sales, the fair market value of our bitcoin holdings as of March 31, 2021 was $2.48 billion.
Based on our trading activity to date, we believe bitcoin is highly liquid, although we generally intend to hold our bitcoin long-term regardless of the manner of acquisition.”
They sold in March at maybe the price of $60,000, meaning they sold 4,500 bitcoins, bringing their current holdings to 37,500 worth $2 billion at the current price.
So making a pretty decent profit. However, to account for any profit holistically, we have to make far more complex calculations and estimations regarding just how much of Tesla’s stock price is due to their bitcoin decisions.
Here it is not clear there is much of a relation on the surface. Tesla was a trillion dollar company at one point, which is as much as bitcoin’s market cap, so some bitcoin on the side is a drop in the water perhaps.
We can see after they announced their bitcoin purchase, their stock started falling even as bitcoin’s price rose significantly, but the car industry is facing some difficulties due to chip shortages. That may have a lot more to do with its price action.
The bitcoin sale news came out yesterday, shown above in that last candle opening down in a gap.
Again, this may have less to do with bitcoin and more with the actual outlook for the company as it stands, with bitcoin giving it a profit and so a record quarter technically.
They haven’t yet shipped new Tesla models, however, which is maybe why investors are not too happy despite revenue beating expectations.
In addition a lot of Tesla’s growth may have been priced in, so the company accepting bitcoin for payments may have been an attempt to tap into new markets.
However, their earnings reveal there has not been a Tesla purchase with bitcoin yet. That may be because they started accepting only on the 24th of March, but you would have expected at least one such sale in the first day/s.
The lack of any may well be because the car sale process takes time, so we’ll have to wait for the next quarter results to gain a better idea.
Another interesting question may well be whether Tesla will now buy bitcoin again with some of their profits, with it unclear just what exactly is their strategy.
They say they aim to hold long term, but obviously they didn’t hold fully, with it to be seen next quarter just what might be their strategy.