Updated 03 May, 2021

Tesla and Its Cryptic Approach to Bitcoin

Tesla and Its Cryptic Approach to Bitcoin

Tesla and Bitcoin

Key Takeaways:

  • Tesla reveals it made a profit of $101mn in Bitcoin sale
  • The company held Bitcoin worth $2.48bn on March 31, 2021


Tesla’s Q1 Report and Bitcoin’s role in its profit

Tesla recently revealed its earnings report for the first quarter. Tesla’s earnings reports have a history of being hard to decipher. However, the latest report could be the most obscure so far. This is primarily due to Bitcoin, and how it is mentioned in the document.

In February, Tesla’s CEO Elon Musk announced that the EV maker has used its cash reserves to purchase bitcoin worth $1.5bn. The first-quarter report revealed that Tesla sold $272mn in Bitcoin at some point during the first trimester to realize a net gain of $101mn.

Tesla reported an operating income of $594mn for the quarter ended March. The result was exclusively driven by the selling of $518 million of regulatory credits and $101 million of bitcoin. The odd case in the slide deck itself was that the text that explains the sale of bitcoin is actually in a different shade of grey. It also revealed it’s not a text but an image that cannot be highlighted. None of the words detailing the bitcoin sale can be searched.

Some analysts are speculating that the company could have concealed that the bitcoin proceeds have lifted Tesla’s profit by $101mn. This translates to 20% of the total net income. Others argue that the company could have done it just to make it harder for analysts to find the Bitcoin part in the document.

Tesla looking ahead

Tesla, being the most valuable car company in the world, has actually never made a profit from selling cars. If it wasn’t for the selling of regulatory credits, the EV maker wouldn’t have been profitable.

The company said during the call with shareholders that the sale of Bitcoin resulted in a “$101 million positive impact”. This was done from a net cash outflow of $1.2bn in cryptocurrency. Following the report, Elon Musk on Twitter said that his car company “sold 10% of its holdings essentially to prove liquidity of Bitcoin as an alternative to holding cash on balance sheet.”

Tesla revealed in its Q1 filing with SEC that as of March 31, 2021, the bitcoin value in Tesla’s treasury was worth $2.48 billion. Bitcoin is currently the only digital asset held by the EV manufacturer.