Bitcoin is fading out from the novelty spectra and is proving a real future with Tesla’s recent purchase of $1.5 Billion worth of Bitcoin.
Renowned billionaire and founder of Tesla, Elon Musk went on what seems like a rampage on Doge and altcoins on his Twitter account last week that resulted in a price surge of various cryptocurrencies, including Doge.
Yesterday (08 February 2021), Tesla announced in a Securities and Exchange Commission (SEC) filing that it has purchased $1.5 Billion worth of Bitcoin and intends to render it a payment form for its products. Whether Bitcoin will be a payment method still depends on the latest crypto regulations, although Tesla clarified that Bitcoin use-cases would be limited in its initial stage.
Following Tesla’s announcement, Bitcoin prices surged to new highs on Monday, reaching a price of at least $44,200. Further, Tesla shares increased by more than 2% on Monday morning.
In Tesla’s SEC statement, it is understood that the firm bought Bitcoin for diversification and maximization of its cash returns and supplemented the account with a warning of Bitcoin’s volatility. Speculators like John Coffee, a Columbia Law School professor, alleged that the decision to buy this much of Bitcoin may be Elon Musk’s own rather than the Tesla team’s, given his history of moving markets.
Like Payment Giants such as Paypal and Visa, Tesla, American electric vehicle and clean energy company, is the latest to venture into the crypto market. Suppose Tesla follows the other Payment Giants’ footsteps, customers will have to transfer their Bitcoin out from their digital wallets to an Exchange, for example, to convert them to a fiat currency before the money is actually sent to the firm.
It is however, possible that Tesla may eliminate an intermediary and build its processing system to accept Bitcoin and liquidate payments.
According to its SEC filing, at the end of 2020, Tesla has over $19 billion in cash and cash equivalents on hand, marking a significant percentage of Bitcoin in its total investment.
Sources | CNA, Cointelegraph, CNBC
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