Bitcoin’s value was on the rise again on Tuesday after electric car maker Tesla Inc (NASDAQ:TSLA) unveiled in its results overnight a multi-million dollar windfall from its investment in the digital currency.
In late-morning deals in London, Bitcoin was up 2.7% in the last 24 hours at US$54,784, giving it a market cap of around US$1.02 trillion.
The crypto saw a short jump in value in the early hours of the morning following Tesla’s quarterly results, where the company revealed a US$101mln “positive impact” from Bitcoin and said it had sold 10% of its US$1.5bn holding in the cryptocurrency during the quarter, making proceeds of US$272mln.
Tesla originally unveiled its sizeable investment in Bitcoin in early February, and since then the value of the digital coin has increased around 22%.
While Bitcoin’s boom so far this year has brought Tesla good fortune alongside others in the crypto market, investors in the company and market analysts have queried whether the firm’s crypto windfall has masked underlying weakness in its core car business.
Boss Elon Musk told reporters the company sold some of its Bitcoin holdings “to prove liquidity of Bitcoin as an alternative to holding cash on balance sheet”.
The company’s chief financial officer Zachary Kirkhorn said: “We do believe long term in the value of bitcoin,” he said.
“It is our intent to hold what we have long term and continue to accumulate bitcoin from transactions from our customers as they purchase vehicles.”
Later on the conference call, he added: “Elon and I were looking for a place to store cash that wasn’t being immediately used, try to get some level of return on this, but also preserve liquidity, you know, particularly as we look forward to the launch of Austin and Berlin and uncertainty that’s happening with semiconductors and port capacity, being able to access our cash very quickly is super important to us right now.
“And, you know, there aren’t many traditional opportunities to do this or at least that we found and and talking to others that we could get good feedback on, particularly with yields being so low and without taking on additional risk or sacrificing liquidity. Bitcoin seemed at the time, and so far has proven to be a good decision, a good place to place some of our cash that’s not immediately being used for daily operations or maybe not needed till the end of the year, and be able to get some return on that.”
Musk said he has not sold his personal holdings of bitcoin.