New details in Tesla’s 10Q shed light on its Bitcoin holdings

Late on the afternoon of April 27, I wrote a quick story right after Tesla posted its press release for Q1 earnings. From the numbers in the report, I estimated that the EV-maker had reaped total profits of around $840 million on its famous, $1.5 billion investment in the cryptocurrency, all made early in the first quarter. I expressed wonder that Elon Must reaped 60% more from speculating in Bitcoin than selling cars, batteries, and software updates.

As it turns out, the fruits of Musk’s Bitcoin adventure dwarfed the profits from his basic auto-and-green energy franchises by an even bigger number.

On April 28, Tesla issued its 10Q. The filing provided new detail on the market value of its Bitcoin holdings that for the first time, allows observers to calculate what it paid for the coins, and assess the full scale of its gains so far. Those gains are bigger than I’d estimated for two reasons: First, Tesla bought the coins for less than I’d calculated, and second, the shrewd timing of its purchases resulted in amassing a bigger trove of coins than I’d figured from studying the press release and its 10k, released on February 8.

The big number: Tesla disclosed that the “full market value” of its current holdings is $2.48 billion, as of the March 31. That day, Bitcoin closed at $59,918. So we know that as of that date, Tesla owned approximately 41,390 coins ($2.48 billion divided by $59,918 per coin). In its press release, Tesla stated that it sold 10% of its Bitcoin in Q1, collecting $272 million in cash proceeds. So prior to trimming its position, Tesla owned around 46,000 tokens. It then sold ten percent, or 4610, to raise the $272 million.

Once again, we know that Tesla paid $1.5 billion for all of its Bitcoin. So the average cost per coin at the time cost of its peak count of 46,000 is $32,600. This is an extraordinary number. Tesla made all of its purchases between January 1 and February 8 of this year; we know that because February 8 was when it filed the 10k that first revealed the celebrated, $1.5 billion position. Bitcoin’s price exploded in this period, and Tesla apparently bought mostly at the bottom, just as it started to ramp up. The signature crypto entered the year at $29,000, within a week shot to $40,000, and hit $46,000 on February 8.

Since March 31, Bitcoin has retreated by over 9% to $54,485 as of late afternoon, April 28. Hence, the the value of what Tesla retains has declined from the reported $2.48 billion to $2.255 billion. We know that Tesla paid $1.357 for those the 41,000-plus coins now on the books. Hence, it owns a stash worth around $900 million more than it paid.

Consider that it also collected another $272 million by selling that 10% of its holdings. It had paid $144 million for that tranche, and booked the difference of $128 million (less the impairment charge) in pre-tax profits. So Tesla’s total gains on Bitcoin appear to be just over $1 billion at today’s prices. That’s almost double its $533 in pre-tax income for the first quarter. Subtract the $518 million it collected (not from selling cars or batteries, but from regulatory credits), and it’s clear that Bitcoin is a rare success story in a Q1 that despite the praise fans heaped on it, was mediocre at best.

Elon Musk is gambling with investors’ cash. For now, the gambit’s paying off a lot better than EVs, but betting on Bitcoin is enough to fray any investors nerves.

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