Under the title "Tesla may incur painful losses from Bitcoin... Will Elon Musk's bet hold?" Al Arabiya published a report about Bitcoin continuing its deep dive towards the bottom this weekend, having dropped from the $42,172 it recorded on Friday, while hovering around $35,000 today, Monday. At one point, Bitcoin's price fell over 50% from its peak of $63,863 on April 14.
As of March 31, Tesla owned $2.48 billion worth of Bitcoin with a book value or cost of $1.33 billion, based on a price of $58,919 recorded for the cryptocurrency on March 31, representing approximately 42,900 units of Bitcoin. In a tweet earlier this month, Elon Musk, Tesla's CEO, stated that the company had not sold any Bitcoin it owns.
After peaking in mid-April, the value of Tesla's Bitcoin has decreased by more than $1 billion since March 31. With a recorded price of $32,500 yesterday, the value of the Bitcoin owned by Tesla has dropped to $1.37 billion. This results in a difference of just over $38 million from what Tesla paid for the Bitcoin, and the cryptocurrency would need to decline by only 3% to reach $31,600 for Tesla's investment in Bitcoin to turn negative.
While a decline of this magnitude has virtually no effect on the company's financial affairs, as it had over $17 billion in cash at the end of March and a market value of $559 billion, it raises questions about whether Tesla should hold onto Bitcoin and other cryptocurrencies due to their high volatility.
While Musk has repeatedly stated that the company will not sell its Bitcoin holdings, a change of mind would not be out of the question, according to an article published by Forbes. The Tesla CEO revealed in April that the company sold 10% of its Bitcoin holdings to demonstrate the liquidity of the cryptocurrency, adding that he retains his personal investment in it.
Tesla's earnings report indicated that the company, which purchased Bitcoin worth $1.5 billion earlier this year, generated $101 million in income from the sale. Musk mentioned on Twitter that Tesla was essentially trying to "prove Bitcoin's liquidity as an alternative to holding cash on the balance sheet."
