Bitcoin gets $ 60,000, which means Tesla has made a lot of money

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Bitcoin traded above $ 60.00 on Saturday. This means that Elon Musk’s commitment to cryptocurrency has been cleared

Tesla

more than a billion dollars.

Bitcoin, which is continuously trading in cryptocurrency exchanges, is up 5% to about $ 59,800 in Saturday morning trading. Bitcoin traded up $ 60,409 on Saturday. This leaves the cryptocurrency up 107% to date and 1,000% over the past year.

Tesla (ticker: TSLA) revealed a $ 1.5 billion investment in Bitcoin in its annual report presented in February to the Securities and Exchange Commission. It’s hard to know exactly what Tesla paid for Bitcoin, but prices back then were around $ 33,000.

At $ 60,000, Tesla has raised approximately $ 1.2 billion. It’s almost a new factory that could produce hundreds of thousands of Tesla vehicles a year.

Tesla spent about $ 1.3 billion in capital assets in 2019, the year it set up its Shanghai facility. This is only an approximation of the cost of the new plant. Tesla spends money on other assets. Different plants in different geographies cost different amounts and do different things. In addition, capital expenditure fluctuates from year to year. Still, it shows how much Tesla has won in its crypto-bet.

Companies always invest excess cash in short-term safe-haven securities, such as Treasury bills. Bitcoin is a currency-like asset, but very volatile, unlike the options most corporate treasury departments would use to manage their cash balances. Bitcoin may be riskier than a treasury bill, but so far it’s hard to argue with the results.

Tesla’s market value has continued to decline since the Bitcoin investment was announced. The share has dropped about 20%, from about $ 863 per share to $ 694. This removes about $ 161 billion from the company’s market capitalization.

However, concerns about more risky than average cash management have little to do with the decline. Interest rates are a more important factor. The yield on the U.S. 10-year Treasury bill has gone from less than 1.2% to 1.6% since the Bitcoin investment was announced. This rise of 0.4% has affected growth stocks.

He

Nasdaq Composite,

the home of many richly valued growth companies, it fell by almost 5% in the same period. He

Dow Jones Industrial Average,

by comparison, it increases by more than 4%.

For a couple of reasons, higher rates affected growth stocks more than other stocks. Companies with strong growth often need money to grow and financing growth is more expensive in a higher rate environment. High-growth companies also generate most of their cash flow in the future. Future cash flow is a little less valuable, relatively speaking, when investors can get higher returns from their investment dollars today.

Write to Al Root at [email protected]