According to estimates by Fortune magazine, as the price of Bitcoin falls below $30, 000, TeslaThe paper gain of nearly $1.5 billion from investing in Bitcoin has come to naught.
In February, Tesla announced an investment of $1.5 billion to buy bitcoins. Fortune estimates that the company bought 46000 bitcoins between the beginning of this year and early February, at an average price of $32600. In April, Tesla revealed that he had sold 10 per cent of his bitcoins, or about 4600 bitcoins, in the first quarter, with an average price of $59100, close to an all-time high. The deal generated $272 million in revenue and a pre-tax profit of $101 million in the first quarter.
At the end of the first quarter, Tesla still held 41400 bitcoins at a cost of $1.33 billion. By April 14, when Bitcoins reached an all-time high of $64800, they were worth $2.68 billion. Tesla sits on paper income of $1.35 billion, plus a profit of $101 million in the first quarter, bringing its realization and paper income to $1.451 billion.
This gain has actually disappeared once. At one point, Bitcoin fell to $28900 on June 22, leaving Tesla with a paper loss of $133 million on his investment. But since then, the price of Bitcoin has rebounded, so in the past month, Tesla's Bitcoin is still worth hundreds of millions more than it was when it was bought.
But on July 20th, those gains disappeared again. At one point, the price of Bitcoin fell to $29600, and Tesla still had a paper loss of $105 million. If Tesla sold the bitcoins today, his $1.5 billion investment would basically break even, but the windfall of $1.451 billion would be gone forever.
This is why it is necessary to sound the alarm when Tesla's currency falls to or below the break-even line. It should remind Tesla investors of the damage it will do to the company if the price of Bitcoin continues to fall.
If Bitcoin falls to $25000, Tesla will suffer a loss of $300m, and if it falls to $20, 000, the loss will rise to $500m, equivalent to almost all of Tesla's pre-tax profits in the first quarter.