Update: Tesla CFO Zachary Kirkhorn says that Tesla trimmed its Bitcoin position by 10% during the Q1 Earnings Call.
Tesla announced that it sold some of its Bitcoin investment during Q1 2021, and it profited $272 million from the sale.
In early February, Tesla released a 10-K filing with the Securities and Exchange Commission (SEC), where it detailed a massive $1.5 billion investment in Bitcoin, a cryptocurrency that has gained massive value in the past twelve months.
Tesla (TSLA) Q1 2021 earnings results: $10.39B in revenue, beats with $0.93 EPS
Tesla detailed the sale in the “Cash Flows From Investing Activities” section of its Update Letter. Under “Proceeds from sales of digital assets,” it lists $272 million in profits.
Credit: Tesla
“We invested an aggregate $1.50 billion in bitcoin under this policy and may acquire and hold digital assets from time to time or long-term. Moreover, we expect to begin accepting bitcoin as a form of payment for our products in the near future, subject to applicable laws and initially on a limited basis, which we may or may not liquidate upon receipt,” the company wrote in the filing.
Tesla even detailed how customers could be able to purchase the company’s vehicles with Bitcoin in the filing, but it could be subjected to the Capital Gains tax as it is seen as the sale of an investment.
However, the electric automaker headed by CEO Elon Musk took some of its Bitcoin investment and decided to let it go. It detailed the decision in the Q1 2021 Update Letter and Shareholder Deck, indicating that the Bitcoin sale, along with other factors, positively contributed to gross margin improvement.
Tesla wrote:
“Year over year, positive impacts from volume growth, regulatory credit revenue growth, gross margin improvement driven by further product cost reductions and sale of Bitcoin ($101M positive impact, net of related impairments, in “Restructuring and Other” line) were mainly offset by a lower ASP, increased SBC, additional supply chain costs, R&D investments, and other items. Model S and Model X changeover costs negatively impacted both gross profit as well as R&D expenses.”
Musk has been a supporter of cryptocurrencies like Bitcoin and Dogecoin. In February, during a Clubhouse session, Musk said, “I do at this point think bitcoin is a good thing, and I am a supporter of Bitcoin. I think Bitcoin is really on the verge of getting broad acceptance by conventional finance people.”
Tesla reported a record seventh-consecutive quarter of profitability along with a revenue of $10.389 billion for the first quarter, non-GAAP earnings per share of $0.93, and non-GAAP net income surpassed $1B for the first time in the company’s history.
