Tesla Holds Steady on Bitcoin and AI Amid Earnings Disappointment

Tesla does not sell Bitcoin.

In its latest earnings call, Tesla confirmed its ongoing Bitcoin holdings, maintaining a consistent stance for the fifth consecutive quarter, despite the crypto market’s volatility. As of September 30, 2023, Tesla’s digital assets remain valued at $184 million, originating from its initial $1.5 billion Bitcoin purchase in March 2021.

Tesla’s strategy in the cryptocurrency market has remained unwavering. After a substantial sell-off in Q2 2022, where they divested 75% of their holdings, generating an impressive $936 million profit from over 30,000 BTC, Tesla has neither added to nor reduced its Bitcoin position. Instead, the company has shifted its focus towards advancing artificial intelligence (AI) technologies.

Tesla proudly announced that its computing capacity for AI projects has more than doubled, emphasizing the expansion of training data and the integration of AI systems, such as their humanoid robot Optimus.

In pursuit of enhancing AI development, Tesla has commissioned one of the world’s largest supercomputers, significantly increasing its computing capacity compared to Q2.

Tesla’s Q3 2023 earnings, however, fell short of Wall Street expectations, with reported revenues totaling $23.35 billion, slightly below the projected $24.38 billion from institutions like Zacks Investment Research.

Operating expenses for the third quarter amounted to $2.41 billion, marking a noticeable increase from the previous quarter and a substantial 42.5% surge compared to the prior year.

Research and development expenses also soared to $1.16 billion in the quarter, reflecting a 58% year-over-year increase, largely due to Tesla’s commitment to projects like the Cybertruck and AI development.

The release of these financial results had a direct impact on Tesla’s stock price, resulting in shares declining by nearly 4.8% to close at $242.68. Furthermore, there was an additional 4.25% drop in after-hours trading, with the stock closing at $232.37, according to Google Finance data.

Regarding Tesla’s Bitcoin journey, the company had estimated its Bitcoin holdings at $1.26 billion in 2022 but subsequently sold 75% of its holdings for approximately $936 million.

Despite this divestment, Tesla retained digital assets worth $222 million on its balance sheet. In February 2023, Tesla disclosed losses exceeding $140 million due to its Bitcoin investments, primarily attributed to an impairment charge of $204 million, partially offset by gains of $64 million from converting Bitcoin into fiat currency.

Tesla’s initial $1.5 billion Bitcoin investment in 2021 had made the company one of the largest corporate holders of the cryptocurrency. Bitcoin’s volatile value led to a $43 million loss in the final quarter of 2022. Tesla’s enduring commitment to its Bitcoin holdings continues to capture the attention of cryptocurrency enthusiasts.

US Approval of Spot ETF Could Ease Bitcoin ($BTC) Price Hitting $1 Million

In a related development, an analyst’s recent comments created a stir in the cryptocurrency market. Rumors falsely suggested that the U.S. Securities and Exchange Commission (SEC) had approved BlackRock’s spot Bitcoin exchange-traded fund (ETF) application, leading to a frenzy in the cryptocurrency market.

The rumors, which spread from social media to the Bloomberg Terminal, caused Bitcoin to surge beyond $30,000 and then quickly plummet after BlackRock clarified that the ETF was still under review. This frenzy resulted in over $100 million in liquidations within a single hour.

>>> Bitcoin Breaks Historical Level, Eyes $32k in Ongoing Uptrend

Analyst Alessandro Ottaviani, on the microblogging platform X, suggested that Bitcoin’s market capitalization increased by over $50 billion in minutes during this incident, estimating that approximately $500 million of capital entered the market.

This suggests a ratio of 100:1, indicating that for every dollar that entered the market, Bitcoin’s market capitalization rose by $100.

Main take away of today: Bitcoin makrket Cap went up by more than $50 billion in minutes, and very likely the money flowing into Bitcoin were less than $500 million (ratio 100:1)

A former Blackrock Director said that we can expect $150-200 billion flowing into Bitcoin in 3…

— Alessandro Ottaviani (@AlexOttaBTC) October 16, 2023

The analyst referenced a former BlackRock Director who estimated that between $150 billion to $200 billion could flow into the Bitcoin market in three years if a spot Bitcoin ETF were approved in the United States.

Such an ETF would provide a regulated and mainstream investment vehicle for exposure to Bitcoin without the need to directly hold the cryptocurrency.

Applying the same ratio, the analyst proposed that a $200 billion capital inflow would theoretically lead to a Bitcoin market capitalization of $21 trillion. In this scenario, the price of Bitcoin could reach $1 million per coin.

However, the analyst acknowledged that as the price of Bitcoin rose, more holders might start selling their coins, potentially offsetting some of the price gains.

Despite the recent price volatility in the cryptocurrency market, BlackRock’s CEO, Larry Fink, expressed that there is “pent-up interest in crypto” and suggested that the recent rally could be attributed to a “flight to quality” amid global geopolitical issues. He noted that the firm has been hearing from clients worldwide about the need for cryptocurrency.

As for Bitcoin’s market capitalization, the founder and managing partner of SkyBridge Capital, Anthony Scaramucci, recently speculated that it could reach $15 trillion, a substantial increase from its current market capitalization of $540 billion, representing a potential growth of 2,660%.