Tesla Motors reportedly made more than $900 million on $1.5 billion Bitcoin investment
NASDAQ-listed electric vehicle (EV) pioneer Tesla Motors invested a considerable amount in Bitcoin and has pocketed a significant return on its investment on the controversial cryptocurrency, according to emerging reports. Just a round a week ago, the Palo Alto, California-based EV manufacturer announced that it changed its investment policy, which allowed it to invest in cryptocurrency and gold. The EV giant confirmed its investment in cryptocurrency included a $1.5 billion investment in Bitcoins.
The company explained that its investment policy was updated in January this year, and the move provided it with more flexibility to diversify and maximize returns on the cash that is not required to maintain adequate operating liquidity. It stressed that its new investment policy was appropriately approved by the Audit Committee of its Board of Directors.
Making the announcement, the EV giant added, “We may invest a portion of such cash in certain alternative reserve assets including digital assets, gold bullion, gold exchange-traded funds and other assets as specified in the future. Thereafter, we invested an aggregate $1.50 billion in Bitcoin under this policy and may acquire and hold digital assets from time to time or long-term.”
A surge in value of the cryptocurrency following Tesla’s investment has reportedly enabled the EV manufacturer to pocket a return of more than $900 million in paper profit. We call it paper profit as it hasn’t been booked yet.
While the automaker neither disclosed the number of Bitcoins that it acquired nor the price at which the cryptocurrency was purchased, it has been reported by some media outlets that the price of Bitcoins purchased by the company averaged at around $35,000.
At that average price, the EV manufacturer should have nearly 43,000 Bitcoins as the company has confirmed that it has invested $1.5 billion in the cryptocurrency.
Since January this year, the price of Bitcoin has surged nearly 60 per cent, and roughly 25 per cent of that increased only after the announcement that the EV maker has made a considerable investment in the cryptocurrency. Now, the value of a Bitcoin is trading at close to $55,000.
It means that the American EV maker now possesses Bitcoins worth nearly $2.4 billion, which represents unrealized gains of more than $900 million from its investment.
However, Tesla CEO Elon Musk recently warned investors that they should be very cautious while investing their savings in cryptocurrency. He stressed that it is fine to invest a fair amount in cryptocurrency, but spending all life savings in it would be just unwise.