Musk's Bitcoin guess promotes earnings in firms already invested

© Reuters. FILE PHOTO: A car with the "Buy Bitcoin" sign is pictured in snow in Stockholm

By Noel Randewich

(Reuters) – Stocks of companies invested in Bitcoin clearly outperformed each other on Wall Street in 2021, increasing their profits thanks to Tesla's $ 1.5 billion (NASDAQ 🙂 bet on the emerging digital Currency.

The price of Bitcoin hit a record high of over $ 48,000 in two days on Tuesday after Tesla announced on Monday that it had bought the digital currency and will soon accept it as payment for cars.

A handful of Bitcoin companies listed on U.S. exchanges also benefited from disclosing that Tesla CEO Elon Musk, a cryptocurrency fan, added Bitcoin to the electric car maker.

Chart – Rising stocks of companies that own Bitcoin:

Tesla's Bitcoin purchase is a small bet for the fast-growing $ 800 billion electric car company. However, it strengthened the emerging references of digital currency as a mainstream financial asset.

Partly due to the interest of institutional investors, the price of Bitcoin has quadrupled in the last four months and is well above the record levels of 2017. Some investors see this as a hedge against inflation.

Tesla gained after announcing the investment on Monday, but fell 1.6% on Tuesday, leaving its profit at 20% in 2021, compared to the 4% increase.

Companies that are exposed to much more Bitcoin relative to their total market value than Tesla have also rallied after Tesla's disclosure, adding to already strong stock gains due to the recent rally in the cryptocurrency.

MicroStrategy, whose CEO Michael Saylor is an avid Bitcoin bull, gained 22% on Tuesday and gained over 50% this week. By 2021, business intelligence software was valued at over $ 3 billion in value, accounting for more than a quarter of its market value of $ 11.8 billion.

Canadian financial technology company Mogo, which announced in December that it would invest up to $ 1.5 million in Bitcoin, rose 45% on Tuesday, bringing its profit to 85% since Tesla's announcement and a market value of $ 318 million. Dollars.

Payment company Square was down nearly 1%, growing 19% in 2021. In October, Square announced it had bought 4,709 bitcoins for about $ 50 million, which is roughly 1% of total assets as of the end of Q2 2020. These bitcoins are now worth over $ 200 million.

Marathon Patent Group, a bitcoin mining company that announced in January that it had bought nearly 4,900 bitcoins for $ 150 million, is up over 60% this week and up 260% year-to-date.

PayPal Holdings entered the cryptocurrency market in October, allowing customers to buy, sell, and hold Bitcoin and other virtual coins through the U.S. digital payment company's online wallets. The stock is up 21% in 2021.

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