Tesla & More Gambled on Bitcoin and Lost Billions – Are Your Investments Safe?
It’s true, we are living in perilous economic times. The most astute traders will continue to make gains, but even seasoned investors are having a trying time navigating these rough financial seas.
Losses occur but those companies who have suffered big crypto losses are taking it on the chin. As Blockworks reports, three industry leaders and heavy crypto investors — Elon Musk (Tesla, Inc.), Jack Dorsey (Block, formerly Square inc.) and Michael Saylor (MicroStrategy LLC) — have seen their companies’ balance sheets pounded and their collective losses in bitcoin drop to over $2 billion.
After acquiring 43,200 BTC worth $1.5 billion in February 2021, Musk’s Tesla had a bitcoin nest worth around $844 million in the first quarter of 2022. Its total now shows a loss of around $655 million, a 45% decrease in bitcoin buys.
Dorsey’s Block owned 8,027 bitcoin in mid-June at an average cost of $27,407 for a total of $220 million. His estimated unrealized losses amount to $63 million, per Blockworks.
And according to Bitcoinist, Saylor’s software development company MicroStrategy has spent around $4 billion and has amassed nearly 130,000 BTCs over the past two years. As of mid-June, MicroStrategy was valued at $3 billion, but its bitcoin-related losses on paper amount to roughly $1 billion, per Bloomberg.
Although Tesla and MicroStrategy collectively account for almost 78% of all Bitcoin owned by publicly traded companies, the three companies together are down $2.16 billion on bitcoin investments. The overall crypto market that was estimated to be worth $3 trillion six months ago is now worth under $1 trillion, according to The Guardian.
These three aren’t the only firms that were saddled with significant unrealized losses. Cryptocurrency exchange platform Coinbase (holders of 4,483 bitcoin) has been losing market share at an accelerating pace and South Korean-Japanese video game publisher Nexon (1,717 bitcoin) partially blamed its August 2021 $4.1 billion loss on bitcoin volatility, per Currency.com.
However, those close to the seemingly never-ending highs and lows of crypto investment don’t seem overly concerned. Despite ongoing crypto unpredictability, there is an unwavering optimism among those who invest in it. Kim Grauer, head of research at Chainalysis said, “Crypto is not going away. And it has experienced crashes more severe than this crash,” per The Guardian.
Nexon, who invested $100 million right before Bitcoin’s slump in April 2021, will continue to bet on crypto. “In the current economic environment, we believe Bitcoin offers long-term stability and liquidity while maintaining the value of our cash for future investments,” Nexon CEO Owen Mahoney said in a statement announcing the company’s Bitcoin investment.
Resolute determination is fine for those who can carry their companies through volatile price swings, but what is the average investor to do in financially-turbulent times as these? As TIME’s Next Advisor recommends, keeping your crypto investments in check and not committing too much of your portfolio to it (under 5%) is a good start.
“You have a high chance of losing it all, but a small chance of winning it big,” says Modern Money Management CFP Nate Nieri. “Don’t gamble an amount that would burden your family or prevent you from achieving your goals.”
It will be interesting to see how long the bigger firms hold out. As Bloomberg reported, speaking at a Bitcoin 2021 conference in Miami, Dorsey stated, “Bitcoin changes absolutely everything. I don’t think there’s anything more important in my lifetime to work on.”
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