Tesla’s Bitcoin profits risk evaporating as BTC eyes run-down towards $30K

Tesla's Bitcoin holdings might vanish if BTC prices cash to $30,000. Image from Creative Commons
Tesla’s Bitcoin holdings might vanish if BTC prices cash to $30,000. Image from Creative Commons

Key Takeaways:

  • Tesla’s quarterly earnings report states the firm’s Bitcoin holdings in Q4 remain unchanged.
  • Meanwhile, dropping BTC prices risk eating away Tesla’s Bitcoin profits.

NEW DELHI (CoinChapter.com) — Tesla released its quarterly earnings report on Wednesday that states the EV company’s Bitcoin (BTC) holdings remained unchanged at the end of the previous quarter, worth approximately $1.26 billion.

In the last quarter of 2021, Tesla generated $17.72 billion in revenue, of which $16 billion were from its vehicle business. Moreover, on an adjusted basis, Tesla’s earnings per share were $2.54. As such, Tesla’s revenue and profit estimate performance in Q4 bested analysts’ expectations.

In detail, analysts expected Tesla to report $16.35 billion in total revenue and $2.26 in adjusted per-share profit.

Tesla's unaudited balance sheet. Source: Tesla Q4 earnings update
Tesla’s unaudited balance sheet. Source: Tesla Q4 earnings update

Tesla’s Q4 report states the company did not buy or sell any Bitcoin in the last quarter of 2021. Additionally, since Bitcoin’s price movements during Q4-2021 were relatively flat, Tesla did not record any impairments to the value of its Bitcoin holdings.

Also Read: US Federal Reserve to end Quantitative Easing (QE) in March. Bitcoin (BTC) tanks.

As per accounting rules for digital assets, if the price of an asset falls during a quarter, the company must report an impairment. For instance, Tesla made no changes to its Bitcoin holdings in Q3 but reported a $51 million impairment to reflect BTC’s decline in price.

Bitcoin’s Decline Threatens Tesla’s BTC Profits

Tesla currently has a total market cap of $757.5 billion, of which 0.2%, or $1.58 billion comes from its Bitcoin holdings. Elon Musk’s EV company holds 43,200 BTC at a cost basis of $1.5 billion. To recap, a cost basis describes an asset’s original value or purchase price for tax purposes.

As such, it would put the average price of Tesla’s BTC holdings at $34,722 per BTC. However, Bitcoin’s falling prices threaten Tesla’s Bitcoin profits. The recent bearish price movement has pushed Tesla’s Bitcoin profits to just 5% over its cost basis.

BTCUSD price movement over the last 30 days. Source: CoinMarketCap.com
BTCUSD price movement over the last 30 days. Source: CoinMarketCap.com

The BTC/USD trading pair has been down nearly 13% in the last seven days, with further downside movement likely as bears seem to be profit booking even on minor relief rallies. BTC price action would likely chip away Tesla’s Bitcoin profits as prices move lower.

Bitcoin Price Chart

BTC prices started an uptrend on Sunday, but bulls flounderer under the strong selling pressure coming from the bears. Jan 24’s long downside wick suggests buyers are aggressive as prices go low. However, sellers become active whenever BTC prices move upwards.

Also Read: Treasury Yields swell as price risks mount for Bitcoin ahead of FOMC meeting.

BTC price’s on Jan 27 swung $1,614, falling 4.3% between the day’s high ($37,147) and low ($35,533). At present, Bitcoin has immediate resistance near $37,500. If bears lose their grip on BTC, Bitcoin would likely move to target resistance at $38,800.

BTCUSD on the daily charts with RSI. Source: Tradingview.com
BTCUSD on the daily charts with RSI. Source: Tradingview.com

If BTC moves and consolidates above $38,000, Bitcoin could target the $40,000 price level. On the other hand, if bulls fail to counter the selling pressure, BTC could fall to $35,200. Moreover, a sustained sell-off could bring support near $33,900 into play.

Moreover, Bitcoin’s relative strength index is back into oversold levels, clocking 29.71 on the daily charts. Traders often consider a move back in oversold regions as a bearish signal. As such, further sell-off could be likely, which means a fall to $30,000 is not unlikely.

At the time of writing, BTC was trading at $36,638, down 0.65% on the day.

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Tesla, Tesla’s Bitcoin profits risk evaporating as BTC eyes run-down towards $30K

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