Tesla provided investors with an update on its Bitcoin holdings in a lengthy SEC filing released this week. It boils down to this after going over the disclosure:
- As bitcoin’s value has dropped, the company has sustained a $101 million loss on the position.
- Tesla’s bitcoin holdings are currently at over $2 billion in market value and $1.26 billion in carrying value.
- In the early part of 2021, Tesla purchased approximately $1.5 billion in bitcoin (BTC-USD).
- a $128 million profit on the sale of a portion of its ownership in the company in 2021.
Tesla’s Interest in Bitcoin
Remember that Tesla first announced its investment in Bitcoin in early 2021. It also began accepting Bitcoin as payment for new Tesla vehicles. Only a few days later, Tesla CEO Elon Musk reversed his decision. Citing that the energy requirements of mining and transacting Bitcoin with fossil fuels were concerning.
Tesla now accepts Dogecoin for select products on its website. As Musk, a prominent crypto phile, has preached his love for other cryptocurrencies like Dogecoin. In a regulatory filing last year, Tesla also gave CFO Zach Kirkhorn the title of “Master of Coin.” It could be a reference to the company’s bitcoin holdings.
While Tesla’s backing of cryptocurrency in general may be something the firm believes will be the future of currency and transactions. Also, some are concerned that the company’s obsession with cryptocurrency may cause it to lose sight of what is happening in the EV industry.
Despite the volatility and investor concerns, Tesla is falling back on its Bitcoin approach. “During this risk-off backdrop, we believe it remains a distraction and sideshow from the underlying Tesla story,” said Dan Ives.
Other Concerns
This is not a new feeling for Ives. In a research report about Tesla’s interest in Bitcoin and subsequent backtracking on using it as payment in May of 2021. Ives reiterated a similar tone.
What concerns Ives and many other Tesla analysts is the ‘green tidal wave.’ Consequently, is the huge change of the car industry from an ICE (internal combustion engine) powertrain structure to 100% electric. Which are motors, inverters, and batteries, as they put it.
“We’re seeing a $5 trillion market opportunity in terms of EV. Also, it’s the biggest revolution to the auto industry since the 1950s.” Ives says, but he’s more concerned with how Tesla can further get into the hands of potential purchasers. He says is the company’s true dilemma.
Shortage Supply
Tesla sold over 309,000 vehicles in the quarter, which would have been approximately 35,000 higher if not for a chip shortfall. So, right now, there’s probably a 10% to 15% barrier in terms of where numbers could genuinely be, following Tesla’s Q4 earnings announcement.
When it comes to high-end goods there is no shortage of demand; it’s the supply that’s the problem. Then he adds, “And that’s something Musk should discuss.
Ives’ advice to “Musk & Co” as he refers to them, is simple: Forget about the distraction of bitcoin and cryptocurrency, and instead focus on the supply issue.
However, as many pundits, fans, and detractors have previously stated, good luck convincing Elon Musk what’s what.
Tesla stock is up today, and Bitcoin is also trading higher today.
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