Long Beach (CoinChapter): Elon Musk’s electric car company Tesla has been linked greatly to the world’s largest cryptocurrency Bitcoin in recent months. The company initially bought $1.5 billion worth of Bitcoin in February which was viewed as a huge deal.
In their quarterly earnings call, it was revealed that Tesla had sold off some of its Bitcoin, which played a major factor in the company producing record income in Q1. Dave Portnoy of Barstool Sports took this as Musk selling off the crypto to make a profit. But Musk responded to Portnoy to clear up any confusion, confirming that Tesla has sold off 10% of its Bitcoin holdings.
The reasoning Musk pointed to is an interesting one to say the least. Musk claims Tesla sold part of its holdings to prove the liquidity of Bitcoin as opposed to cash. And despite selling off 10% of its holdings, Tesla still has seen a massive gain on its initial investment.
A recent securities filings shows that the car company now sits on around $2.5 billion worth of Bitcoin according to CNBC. The company valued its investment at $2.48 billion at the end of March in its earnings call on Monday. At that time, BTC was trading at around $59,000, which is slightly above its current price.
Tesla said it registered a net gain of $101 million from Bitcoin sales. This accounted for nearly a quarter of the company’s net profit in Q1. Overall, their earnings were 93 cents per share as opposed to an expected 79 cents. Additionally, revenue was up 74 percent from a year ago at $10.39 billion.
Tesla Expected To Hold Bitcoin For Long Term
Tesla and Bitcoin seem to be a lock to be linked together for the foreseeable future. Elon Musk has long been a proponent of the crypto as a store of value. Furthermore, the car company continues to accept Bitcoin as a form of payment for its vehicles.
Tesla Chief Financial Officer Zack Kirkhorn also spoke to this in Monday’s earnings call. “We do believe in the value of bitcoin long term, and we will hold bitcoin long term, and accumulate bitcoin from the transactions from our customers buying vehicles,” Kirkhorn said. He also discussed why Tesla chose to invest in Bitcoin in the first place.”
It should also be noted that Tesla does not account for bitcoin as a mark-to-market asset. This means it only recognizes an earnings benefit if it sells to lock in the gains.
The stock of the car company has not quite reaped the benefits of its record earnings however. Shares of Tesla were down 1.6% in premarket trading Wednesday. It has now dropped more than 15% in the past three months. This after being one of the best performing stocks over the past few years.
Corey has been involved in media and writing since graduating from the illustrious Howard University with a degree in Broadcast Journalism. While relatively new to the cryptocurrency world, he has been writing since 2012 with most contributions coming in the sports world on websites such as LakersNation.com and DodgerBlue.com. Corey is also an avid sports fan who closely follows the Lakers, Cowboys, Dodgers, WWE, and UFC.
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