By: Nick Gambino
Elon Musk has been touting the dogecoin as of late, but that didn’t stop his company, Tesla, from betting big on the dominant crypto in the market, bitcoin. The EV company just announced that they bought up around $1.5 billion of bitcoin. They also said they would start accepting bitcoin as payment for Tesla products.
This latter announcement seems to be a “dipping toes in water” situation. “We expect to begin accepting bitcoin as a form of payment for our products in the near future, subject to applicable laws and initially on a limited basis, which we may or may not liquidate upon receipt,” the SEC regulatory filing by Tesla said.
The announcement was met by a surge in the market, sending bitcoin to a record $48,000. It’s already been hovering at stratospheric levels, not dropping below $30,000 for the past month. In comparison, the last time we saw this kind of rally from bitcoin was in 2017 when it hit around $20,000. Standing next to today’s numbers, that looks like mere chump change.
There are some questioning whether Musk is intentionally manipulating the market. Dumping that much into bitcoin is a move that seems calculated to push up the price of the crypto, thus instantly creating a return on investment. I’m not even going to pretend that I’m smart enough to comment on the ethics behind such a move.
Unsurprisingly, the stated intention behind the crypto investment is to maximize cash returns. Tesla has about $19 billion in cash and cash equivalents, so shelling out $1.5 billion is a sizeable investment. That’s nearly 10%. It’s a strong move that has already earned the company a hefty return, the intention of such a gamble.
While Musk is known for being a bit of a rebel who sees promise in cryptocurrency like bitcoin and dogecoin, the plan to buy bitcoin was to use it to make more fiat currency. That is typically looked down upon by crypto purists who are trying to disrupt our financial currency as we know it. Though, Musk is also pushing it into the mainstream which is beneficial for the mission.