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Bitcoin now bigger for Telsa than electric cars — here’s why

A bitcoin on top of Tesla logo
(Image credit: mundissima | Shutterstock)

Tesla is making big money on Bitcoin.

Earlier this year, the company announced that it would be buying $1.5 billion in Bitcoin. That turned out to be a strong bet by the electric car manufacturer. During its first-quarter earnings results, Tesla told shareholders that by selling 10% of its holdings, a total of $272 million in digital assets of Bitcoin, it was able to net $101 million in profit. That's almost a fourth of the company's total profit for the quarter, according to the Wall Street Journal.

To put this into perspective, total revenue at Tesla amounted to $10.4 billion during the quarter, thanks to more than 184,000 deliveries. Of that, $438 million is net income. So, Bitcoin sales, which required not much more than the click of a mouse, were able to make up a fourth of Tesla's profits. That means no steel had to be stamped and no batteries had to be manufactured. For any company, being able to make over $100 million in profit this easily is uncommon.

Tesla's $1.5 billion Bitcoin buy was a surprise to the cryptocurrency market, sending values up earlier this February. Along with the massive asset purchase, Elon Musk announced that it was possible to buy a Tesla with Bitcoin as well.

All of this is tremendous news for Tesla, which was operating in the red for years. Its current market valuation is at $700 billion, five times higher than Ford. It's odd, considering Ford sold 500,000 cars in the U.S., which is double that of what Tesla sold worldwide. It seems that investors believe strongly in Elon Musk's electrification vision. 

At the moment, Tesla is projected to reach 800,000 deliveries in 2021. It's no wonder that companies like Volkswagen, Audi, Mazda, Toyota, Honda, Cadillac, Ford, Hyundai and Mercedes are all introducing EVs. It's where the car market is going worldwide, in large part due to environmental regulations placed by the European Union and the United States. And honestly, which car company wouldn't want the insane stock prices Tesla current covets? 

Of the EVs slated to come out in the next few years, it will be good to keep an eye on the Ford Mustang Mach-E GT, the Toyota bZ4X, Mazda's MX-30, the Audi Q4 e-tron, the Mercedes EQS and the Polestar 2 by Volvo. All come from established automakers with a history of producing consistent and quality product. Quality control and consistency is something that Tesla has struggled with, and continues to do so even with Model Y's shipped earlier this year. 

Imad Khan

Imad Khan is news editor at Tom’s Guide, helping direct the day’s breaking coverage. Prior to working at the site, Imad was a full-time freelancer, with bylines at the New York Times, the Washington Post and ESPN. Outside of work, you can find him sitting blankly in front of a Word document trying desperately to write the first pages of a new book.