The price of Bitcoin (BTC) has grown more than 50% since Tesla revealed its BTC sales of roughly $1 billion in July 2022. In other words, the Elon Musk-owned electric carmaker would have made an additional $500 million if it had waited until today. to sell.
Are Tesla's Bitcoin Transactions Profitable?
Tesla infamously dumped nearly $936 million of its total Bitcoin holdings in Q2 2022, representing 75% of your remaining reserves, to secure a profit of $64 million. At the time, Bitcoin was trading around 70% below its all-time high of $69,000 in November 2021.
Originally Tesla bought $1.50 billion worth of Bitcoin in February 2021 at an average price of $36,000. The company then sold $272 million worth of BTC to increase its first quarter 2021 ledger by $101 million.
However, the company has held on to his remaining BTC as of Q4 2022 even though the price of Bitcoin was at bear market lows of around $16,000 at the time. Today, Tesla has 10,725 BTC worth about $330 million, almost 15% below the acquisition value as of February 2021.
Overall, Tesla made roughly $165 million in profit from two separate Bitcoin sales. As of April 14, he is on top of an unrealized loss of around $56.6 million on his remaining BTC holdings. While his net profit to date is around $108 million.
Will Tesla Divest Remaining BTC Holdings?
Interestingly, Tesla's previous Bitcoin sales came from weaker free cash flows. For example, the Q1 2021 sale of BTC worth $272 million accounted for almost 93% of Tesla's free cash flows in the same quarter.
Similarly, Tesla's Bitcoin sales in the second quarter of 2022 came as its free cash flows decreased by 73% compared to the previous quarter. Both sales suggest that Musk relied on Bitcoin as a safe haven during Tesla's cash crisis phases.
Tesla's CEO explained at the time that the sale was made to "test the liquidity of Bitcoin as an alternative to holding cash on a balance sheet."
Meanwhile, Wall Street analysts estimate that Tesla's free cash flow in the first quarter of 2023 would be nearly $2 billion, up 40% from the prior quarter. This should reduce the chances of Tesla dumping any significant amount of Bitcoin any time soon.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should do their own research when making a decision.
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