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[flagged] Tesla has made $1B profit on its Bitcoin investment (cnbc.com)
27 points by prostoalex 13 days ago | hide | past | favorite | 46 comments

Compared to $721M they made in 2020 in total.

$721M from tax credits. It's more than Tesla made from selling cars, ever.

Did they sell? If not, they bought, say, 50k bitcoin, and they now have 50k bitcoin.

But I agree this whole thing is ludicrous, that they stand to make more than an entire year of profit in a single speculation.

It seems easy in hindsight.

Bitcoin is down ~20% since this article was published, 2 days ago.

Is there a way to know if they offloaded before Musk called it overpriced? Do they have to report sales like they would shares?

> "It’s unclear if Tesla has sold any of the bitcoin yet."

Elon Musk is the master of marketing

2 bubbles supporting each other.

There isn't much support there. Telsa's bubble is over. It's extraordinarily unlikely it'll be worth more than $900 / share 10 or 20 years from now.

The treasury party that has begun is starting to rob the mania of its precious fuel and it doesn't take much to break a mania. The Fed is going to have to do a lot more if they want to stave off plunging asset prices, as rising mortgage rates will tank housing activity as well.

TSL is still massively overvalued in any possible relation to its fundamentals.

If you haven't sold then you haven't made a profit.

I guess with that same mindset Jeff Bezos, Bill Gates and Mark Zuckerberg aren't probably the worlds richest as they have their money locked up in assets etc. Only drug lords should count on the list of the richest as they are the only ones holding money in actual cash (together with assets etc).

This is actually a very reasonable complaint about the estimates of their wealth, it's unlikely that they could convert a significant portion of their stock into dollars at the current price...

1 share might be equivalent to 100 dollars, 1 billion shares is unlikely to be equivalent to 100 billion dollars.

When public companies make offers to buy each other, they usually offer prices a few percent above the public market value, no?

Maybe Amazon is worth less without having a strong leadership. At least Apple gained a lot from the co-founder coming back. But in general, if he sells in small packages, he should be able to convert his stocks into cash if he wanted to.

A company (or anyone else) attempting to buy all of a public company does pay a premium, but no one is about to take Amazon private.

Selling in small packages, alleviates one problem (lack of instantaneous demand), but it still increases the supply of shares in the market, which is going lower the price. That's before you consider effects like strong leadership or that the apparent lack of confidence from the big share holder is going to decrease the price.

Edit: Incidentally if you look at Bezos's trading history, you'll discover that he has been doing the "sell in small packages thing". I'd speculate that he's doing it as fast as he thinks he can get away with: https://finviz.com/insidertrading.ashx?oc=1043298&tc=7

When large investors sell they usually don't sell on the exchange, partially to avoid moving the market too much.

Such transactions happen routinely. It is not at all an issue, the largest were 180-250 billion deals.


Err, you realize

1. You have to go back to 2000 to find a purchase > 200B (AOL bought by Time Warner, for 182, 270B inflation adjusted).

2. The only other >200B purchase was Vodafone Airtouch plc bought by Mannesmann (281B inflation adjusted, 183B in 1999 dollars), "it happened twice" isn't routine.

3. That 270B is 1/6th of Amazon's market cap.

It is not about locked up on asset, it is about locked up on volatile asset vs stable asset.

No, that's not at all what bondarchuk said. bondarchuk hinted that if you don't have the cash from selling something, you can't count that as making a profit, as you haven't actually taken any profit.

Why would it matter if it's volatile or stable?

It might matter to someone who wants their headline to still be true in two days, which this headline isn't at the moment, after Bitcoin's recent drop.

The value of any asset might change significantly in two days, but the odds of that are much, much higher with Bitcoin.

Yeah, if you're into a life that doesn't move forward, I don't think you have a lot of options. Many of our headlines today are ephemeral and true for now, but historically becomes false after a while. Bitcoin is no exception.

I think most people are into a life that doesn't move forward 15% one day then backward 15% the next, leading to ephemeral "profits" like these.

For those who would rather live in a world where headlines are true one day and false the next, and wealth is ephemeral, Bitcoin is a good place to find that thrill.

And prematurely reporting unrealized profits seems to fit the Bitcoin mindset nicely. Goes well with "money" not actually used for (legal) transactions and a "store of value" that regularly changes value more than 10% in a day. The hype train must keep on moving, lest the party end.

Sure, but what does that have to do with the initial point that this thread is about?!

Imagine you have 2 people, applying for a loan from you.

- 1 has AMAZON shares worth 5000 USD as collateral - 2 has BITCOIN worth 5000 USD as collateral

you can say for example, you can grant 4000 USD credit for 1, maybe 2000 USD credit for 2.

> I guess with that same mindset Jeff Bezos, Bill Gates and Mark Zuckerberg aren't probably the worlds richest as they have their money locked up in assets etc.

This is a hilarious statement on the very day that The Guardian reports that Elon Musk is no longer the world's richest person precisely because that wealth is locked up in assets that lost value. https://www.theguardian.com/technology/2021/feb/23/elon-musk...

The reference claim is that Tesla has made a $1 billion profit, emphasis on profit. You only generate a profit in that context if you've sold.

If you'd like a proof on how this works in action, let your gain in a stock (or Bitcoin) evaporate, sell your position at break-even, and then demand to be paid your former unrealized 'profit,' see what happens.

What does any of that have to do with Gates or Bezos holding stock in a company?

Yes, for example the CEO of Theranos was a billionaire but dropped to 0 overnight after exposure of fraud.

It's not a mindset, profit is defined in accounting law, and Bitcoin is considered an intangible asset, where price inceeases are not accounted as profit (but losses are written down).

Too bad the "accounting law" you are referring to is most likely the American one and doesn't apply worldwide, which Bitcoin does. The way you describe it to work is not applicable everywhere.

Sure, I was writing about Tesla’s case, as it’s a US company.

Actually old nobility specifically not included on "richest" lists.

Exactly - especially given that BTC is -13% today.

In the article body they use the more accurate term "paper profit".

Though for a company it is still a taxable gain!

Typically not until it is realised

For an individual. For most companies an increase in the fair value of a financial asset is a taxable gain, unless it can achieve a special accounting treatment. But I doubt a position in btc wouldn't be fair valued.

Why? Assuming a sufficiently liquid asset, not selling is identical to selling and re-buying for the same amount.

Not "profit". "Paper profit". Very, very different thing, especially when it comes to Bitcoin.

Plus, the price tanked since this article was written.

That's where a lot of people get confused on "wealth". A majority of the top 100 richest folks dont have that liquid. Sure, they can borrow against their assets, but that does change their wealth status in some ways. Musk doesn't have 185b in bills that he can go make it rain at a strip club. In some sense, the whole stock wealth count is weird since as you offload your stock at a large volume, you tank the value. Dropping your wealth even more.

Paper profit, accounting wealth, assetable value, and whatever else its called gets weird when you think about it in practical terms.

Do they? This type of comment is posted everywhere as if it is some kind of revelation. I think maybe young children think that, but I'd imagine the average adult has grasped the idea that Musk is rich because he owns companies. And they more often do have it liquid, publicly traded stocks are a liquid asset. They can also convert it into cash far more easily than you seem to imply, Bezos sells billions in Amazon stock every year, Gates owns ~2% of Microsoft now down from 25% in the 90s, etc. Sure if Bezos decided tomorrow to flood the market the price would plummet, but he could easily put together a plan for selling his share over the next few years, especially now he is no longer CEO.

I dont have a revelation what so ever. I think 80%+ of HN users easily know about this. But there are some that dont. It's not a bad idea to just throw out, every now and then, a simple explanation for people to start of a rabbit hole education on the topic who are unaware. Also, to me, it's interesting to think about in terms about how fragile and kind of weird weath perception is. We think Musk is the "richest", but it's not like he is rich enough to move that amount of money around at his whim. I bet there are lower tier rich people with more cash that in a practical aspect, we would think of richer when it comes to speed of use. Like, if you needed to borrow $1k from a friend to help for rent/mortgage next week. Who can help you faster, the one with $1k in hand or the one with $10k in assets and can get you the $1k in 2 weeks after unloading (a little hyperbolic, I know)? I'm not saying one is better than the other either. What is more useful, $100k in a safe or a $100k Haas CNC mill? I say the cnc. But you can say the 100k in cash has better opportunity potential, especially if the cnc doesn't work out, including the immediate 25% devaluing since it's now "used". Which is true too. Again, no revelation. Just interesting to remind yourself from time to time and if someone doesn't know about this already, it's nice to enlighten them. Plus the idea of money and value gets super weird when you realize how easy it is to manipulate.

"but he could easily put together a plan for selling his share over the next few years, especially now he is no longer CEO"

That doesn't sound very liquid to me.

Stocks are liquid assets by definition.

Why would you need liquid 185b? Why would you take 185b to the strip club? (I would even dispute your claim - I assume that strippers would absolutely not mind if you brought them 185b of paper assets).

Even if it takes a lifetime to see that value, you have a Richie Rich [edit: I mean, Brewster's Millions] problem of how to spend it.

Employing people's labour or buying capital is expected and won't tank the value - and what else would you want to do with it?

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