Tesla’s $1.5 billion Bitcoin investment reportedly gained $1 billion profit, analyst estimate

Elon Musk’s Bitcoin investment seems to be paying off as Tesla reportedly made about $1 billion in profits, according to Daniel Ives, an analyst at Wedbush Securities.

The analyst estimates that Tesla is on track to making “more from its Bitcoin investments than profit from selling its EV cars in all of 2020,” in a note published on Saturday.

Earlier this month, Musk publicly declared his support and interest in Bitcoin and other cryptocurrencies. He backed up his support by making a $1.5 billion worth of Bitcoin investment and also said that Tesla would soon start accepting Bitcoin as a form of payment for its vehicles. This was disclosed in a Securities and Exchange Commission filing which stated that expanding into Bitcoin would help the automaker achieve “more flexibility to further diversify and maximize returns” on its cash.

Bitcoin has been in a rally this year, so much that some financial firms have warned that huge risks could follow. In 2017, JPMorgan CEO Jamie Dimon criticized Bitcoin, calling it a “bit of a fraud.” Three years later, many institutional investors are starting to give more attention to Bitcoin, including JPMorgan. The financial firm has forecasted the price of Bitcoin hitting $146,000.

“If you are a company CEO and thinking about adding #Bitcoin to your balance sheet you still have the opportunity to be an early adopter. But not for long,” said Cameron Winklevoss, co-founder of crypto-exchange Gemini, in a tweet.

The price of Bitcoin smashed new record highs most recently, with its market value topping $1 trillion for the first time last week. The digital currency is also up 94% year-to-date, according to Ives.

“While the Bitcoin investment is a sideshow for Tesla, it’s clearly been a good initial investment and a trend we expect could have a ripple impact for other public companies over the next 12 to 18 months,” Ives said.

Data from CoinDesk also showed that price of Bitcoin jumped to an intraday high of $57,487.03 on February 20, from an intraday high of $34.793.45 on January 31, an estimated rise of 65%. Based on CoinDesk’s calculations Tesla’s $1.5 billion Bitcoin investment is worth approximately $975 million. If the calculation is based on Monday’s intraday high of $58,332.36, the profit would be well over $1 billion.

Tesla CEO Elon Musk backed up his company’s Bitcoin investment decision by saying Bitcoin is “simply a less dumb form of liquidity than cash,” adding that it is “adventurous enough for an S&P 500 company,” Musk said in a tweet on Thursday.