Tesla Missed Out On Billions By Selling Bitcoin Too Early

As part of Tesla's earnings report this week, the EV maker revealed that the value of its digital assets (which consist primarily of Bitcoin) is worth $1.24 billion. At first glance, it's a pretty impressive figure. After all, the price of Bitcoin today is higher than it's ever been in history. At the time of this writing, the price of Bitcoin stands at $116,043, marking a nearly 75% increase over the last year alone. And just two days ago, Bitcoin hit an all-time high of $120,000.

Where Tesla went wrong, however, is that it sold the vast majority of its Bitcoin holdings far too soon. So while the $1.24 billion figure is nothing to scoff at, Tesla missed out on nearly $4 billion in what would have been pure profit had it opted not to sell a few years back. It's hard to fault Tesla, though. Bitcoin is incredibly volatile and is more akin to a speculative stock than a viable digital alternative to money. In other words, expecting Tesla to sell at exactly the optimal time is unrealistic.

Tesla's history with Bitcoin goes back to February of 2021, when the company purchased $1.5 billion of the cryptocurrency. Given the time frame in which the purchase was made, we can deduce that Tesla's initial purchase consisted of about 40,000 to 44,000 Bitcoins. At that time, the price of Bitcoin regularly fluctuated between $36,000 and $46,000.

Less than a year after its initial purchase, Tesla offloaded 10% of its Bitcoin holdings. By July of 2022, the EV maker revealed that it sold upwards of 75% of its Bitcoin holdings for about $936 million. Analysts estimate that Tesla, when the dust settled, made a modest profit of $64 million at the time. All told, Tesla sold around 30,000-34,000 Bitcoin over the last few years, leaving it with about 10,500 to 11,500 units, according to a report from Coindesk. That would still amount to well over $1 billion if Tesla were to sell it right now.

Earlier this week, Bitcoin reached an all-time high of $120,000. Suffice it to say, if Tesla held on to its Bitcoin, it could have made billions more. Assuming that Tesla sold 32,000 Bitcoin, and given that the price of Bitcoin today is $116,000, the total value of the Bitcoin Tesla sold could have been worth $3.71 billion. And if Tesla sold when Bitcoin was in the $118,000 range, the value of its sold Bitcoin would have reached $4.01 billion. And when you add that to Tesla's current Bitcoin holdings, the company could have been sitting on $5.25 billion worth of Bitcoin.

If Tesla timed the sale of its Bitcoin just right, which admittedly is something of an impossibility, the company would have been able to completely foot the cost for its Gigafactory in Germany. What's ironic is that by the time Tesla went all-in on Bitcoin in 2021, Tesla CEO Elon Musk admitted that he should have gotten involved with the cryptocurrency years earlier.

"I do at this point think Bitcoin is a good thing, and I am a supporter of Bitcoin," Musk said a few years ago. "I mean I clearly should have at least bought some bitcoin eight years ago." And now, years later, it seems that Tesla bought too late and sold too soon. Tesla's saga with Bitcoin tends to bolster the argument of its critics who claim that the cryptocurrency will never fulfill its initial promise of being an alternative to government-issued currency.