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On February 8th, Tesla invested $1.5 billion in bitcoin and will start accepting cryptocurrency as payment in the near future. Their reasoning for this was “more flexibility to further diversify and maximize returns on our cash.” This is major in the car industry as well as the cryptocurrency industry because Tesla is the first automaker to begin to accept cryptocurrency. The chief of economic advisory at Allianz, Mohamed A. El-Erian said this investment should give Bitcoin a boost, which it has. Soon after the announcement of this investment, the rate of Bitcoin has skyrocketed breaking the $44,000 mark which is the first time in Bitcoin history.
There are heavy opinions from analysts and investors stating that this move could be great for Elon Musk, the founder of Tesla, but it’s definitely risky for the company. Being that Tesla is one of the world’s most standard carriers for the electric vehicle industry and the wide range of the climate tech movement moving around it, Tesla’s investment towards Bitcoin could damage its climate intentions and its reputation with customers. Bitcoin is a very dirty business. When it comes to Bitcoin, you have to mine, and with mining goes against the idea of Tesla from an energy perspective. As far as Bitcoin investors, this was a great move giving them roughly an 18% boost in the value of their holdings in roughly a day.
Bitcoin fluctuates up or down while the value of a vehicle will always depreciate once it is off the lot. Though it is a slower loss being that the vehicle is electric, it still loses its value overtime. For those who purchased this form of currency, it may be an easier way to buy because all you have to do is transfer your currency or trade it in for cash. This makes it a more attractive way to buy a vehicle. Overall, Tesla’s Bitcoin investment is a topic of conversation and honestly, only time will tell where the future of this investment will go. We leave it up to time!Buying a vehicle with Bitcoin may not be a smart idea.
