Tesla is likely to have made a larger profit from its bitcoin investment in January than it did from selling electric cars in the whole of last year as the value of the cryptocurrency went through $1 trillion yesterday.
Assuming that the electric carmaker holds as many bitcoins today as it did on January 31, it has made a paper profit of about $930 million, more than the $721 million profit it reported for 2020.
The value of all bitcoins in circulation surpassed $1 trillion after the digital currency hit another high. It broke through $53,000 for the first time, rising to $55,520.48 in New York last night, a gain of 7.6 per cent for the day, 17.2 per cent for the week and 67 per cent for the month.
Tesla disclosed this month that it had invested $1.5 billion in bitcoin in January but did not say how many bitcoins it had bought or continues to hold.
It would have been far less profitable last year had it not sold “green” credits worth hundreds of millions of dollars to other car companies each quarter. Makers of fossil fuel-powered vehicles buy the credits to help them to reach regulatory emissions targets.
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Bitcoin, the most actively traded digital currency, exists only as computer code and has no physical form. It was launched by a pseudonymous figure known as Satoshi Nakamoto in 2009, at which point its value was roughly zero.
The latest gain for bitcoin came despite a bearish note from JP Morgan, America’s largest bank, which suggested that it was worth only $25,000 at present levels of volatility.
The note said that bitcoin was “here to stay” as an alternative currency and that its appeal was likely to be sustained because millennials “have shown their preference for digital gold over traditional gold”. However, the surge in bitcoin was an “economic sideshow” to wider developments in the digital currency market and parts of the bitcoin market were “most likely in a bubble due to excessive speculation”.
On Thursday night, Elon Musk, chief executive of Tesla, said: “Having some bitcoin, which is simply a less dumb form of liquidity than cash, is adventurous enough for an S&P 500 company.
“To be clear, I am not an investor, I am an engineer. I don’t even own any publicly traded stock besides Tesla. However, when fiat currency has negative real interest, only a fool wouldn’t look elsewhere.
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“Bitcoin is almost as [bulls**t] as fiat money. The key word is ‘almost’.”
