Tesla selling Bitcoin ( $0.00 ) last year turned out to be a $500M mistake

The price of Bitcoin ( $0.00 ) (BTC) has grown by more than 50% since Tesla unveiled its approximately $1 billion BTC sales in July 2022.

Are Tesla’s Bitcoin ( $0.00 ) trades profitable? 

Tesla infamously dumped nearly $936 million of its total Bitcoin ( $0.00 ) holdings in Q2/2022, accounting for 75% of its remaining reserves, to secure a $64 million profit. At the time, Bitcoin ( $0.00 ) was trading about 70% lower than its record high of $69,000 in November 2021.

Originally, Tesla purchased $1.50 billion worth of Bitcoin ( $0.00 ) in February 2021 at an average price of $36,000. The company then sold BTC worth $272 million to boost its Q1/2021 accounting by $101 million.

The company has nevertheless held on to its remaining BTC as of Q4 2022 despite the price of Bitcoin ( $0.00 ) sitting at bear-market lows of around $16,000 at the time. Today, Tesla holds 10,725 BTC worth around $330 million, almost 15% below the procurement value from February 2021.

Overall, Tesla made roughly $165 million in profit from two separate Bitcoin ( $0.00 ) sales. As of April 14, it sits atop an unrealized loss of around $56.6 million on its remaining BTC holdings. While its net profit to date sits at around $108 million. 

Will Tesla dump remaining BTC holdings?

Interestingly, Tesla’s previous Bitcoin ( $0.00 ) sales came from weaker free cash flows. For instance, the Q1/2021’s BTC sale worth $272 million made up nearly 93% of Tesla’s free cash flows in the same quarter.

Similarly, Tesla’s Bitcoin ( $0.00 ) sales in Q2/2022 came as its free cash flows declined 73% versus the previous quarter. Both sales suggest that Musk relied on Bitcoin ( $0.00 ) as a haven during Tesla’s cash crunch phases.

The Tesla CEO explained at the time that the sale was made to “prove liquidity of Bitcoin ( $0.00 ) as an alternative to holding cash on a balance sheet.”

Meanwhile, Wall Street analysts estimate that Tesla’s free cash flow in Q1/2023 would be nearly $2 billion, up 40% versus the previous quarter. This should reduce the chances of Tesla dumping any significant Bitcoin ( $0.00 ) amount in the near term.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.