Tesla's bitcoin speculation helped boost profits by more than $100 million in Q1

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TSLATesla, led by Elon Musk, confirmed that it purchased about $ 1.5 billion in bitcoin in January and expects to start accepting it as a payment in the future.Artur Widak | NurPhoto | Getty Images

Tesla reported first-quarter results on Monday, including a record quarterly net profit of $438 million on a GAAP basis.

As usual, those profits were buoyed by sales of environmental regulatory credits. But in a new wrinkle this quarter, the company’s sales of bitcoin during the quarter also contributed $101 million toward the bottom line.

In February, Tesla made waves when it announced a $1.5 billion purchase of bitcoin and said it may continue investing in cryptocurrency more broadly.

On Monday, Tesla’s shareholder update revealed that sales of bitcoin made a $101 million “positive impact” to the company’s profitability during the period ending March 31, 2021.

On the company’s cash flows statement for Q1 (page 26), it recorded $1.5 billion in purchases of “digital assets,” as well as $272 million in proceeds from sales of digital assets during the quarter.

Elsewhere (page 5), the company says its profitability was helped from a sale of bitcoin which contributed a $101 million “positive impact, net of impairments, in ‘Restructuring and Other.'” This shows up as a $101 million reduction in operating expenses on the company’s Statement of Operations (page 24).

This suggests that the company quickly flipped some of its big bitcoin purchase for a gain of $101 million, as bitcoin prices rose during the quarter.

As CFO Zachary Kirkhorn said during the earnings call, “Elon and I were looking or a place to store cash” that wasn’t immediately being used to get returns. But they had a need to be able to access their cash quickly too.

“Bitcoin has proved to be a good decision. A good place to put some of our cash that’s not being used for daily operations…and be able to get some return on that.” Kirkhorn added that while they were pleased with the liquidity of the bitcoin market, “It is our intent to hold long-term.”

Tesla does accept bitcoin payments from customers now.

But apart from that, it’s not clear how investments