For a brief moment on Sunday, before You’re here said it has invested $ 1.5 billion in Bitcoin and planned to let people use cryptocurrency to pay for cars, the price of bitcoin could be expressed with a perfectly simple number: it was worth the same as a base Tesla 3 model. The next day, however, the comparison became complicated, as the news of Tesla’s investment was well propelled the value of a bitcoin on its way to pay for a second car. It has plunged and risen several times since then. No guarantee of how many EVs a bitcoin will produce as you read this article.
Hence, for some, the strangeness of a company announcing as soon as it had invested a lot of money in bitcoin as an asset – among the biggest corporate purchases of a cryptocurrency to date. day – while asking you to spend it like dollars. It’s a problem almost as old as bitcoin – practically definitional, in fact, from the first modest pizza orders with bitcoin now worth in the billions of dollars. Today, it’s the prospect of buying a car (the cheapest Model 3 is priced at $ 37,990, and should still be the same tomorrow) that depreciates the moment it rolls off the lot. You’ll get a used Tesla, sure, but you might have missed the next cryptocurrency spike.
In recent months, the tide has shifted in one direction: this bitcoin is a store of value, the kind of thing you buy and hold with the hope of someday selling it for more money. Banks and hedge funds have more and more jumped at the idea, looking for new returns in an age when stocks seem a little foamy and there is little reward in putting money in bonds and cash. In doing so, they embraced the idea that bitcoin will stick around and could hold long term value, like platinum or gold – a legitimate alternative asset. Tesla gave an equally innocuous logic in the file which revealed his new stake, which he wanted to “diversify and maximize the returns on our liquidity that is not necessary to maintain adequate operational liquidity”. In other words, Tesla sees the same benefits as other business buyers. Bitcoin is high risk and high reward – and most importantly, recently it has been rewarding. “The cynical point of view is that they think they can make the money,” says Michael Ramsey, automotive analyst at Gartner.
Nevertheless, Tesla’s interest in bitcoin also speaks of a more spiritual association. “I just smiled at the start. It’s kind of a perfect marriage, ”says Ramsey. First, there’s Tesla’s unusual appetite for risk. Then there’s a story of overlapping fanbases, which helped transform Tesla CEO Elon Musk in perhaps the most important crypto influencer of the moment. Last month, when he added #Bitcoin to his Twitter biography, the value of the cryptocurrency jumped 20% in an hour. (It has since been deleted.) A series of playful tweets on Dogecoin on Sunday sent the value of the so-called “meme” cryptocurrency, which had started as a joke, to record heights. While Ramsey is skeptical that many people will accept Tesla to trade their bitcoin for cars, for practical reasons it is not a bad marketing decision, he adds. For a certain kind of person, a bitcoin for a Tesla sounds great like the ultimate flex. (That is, if you can get over the idea of buying an electric vehicle with a cryptocurrency that runs on the same amount of energy as a mid-sized country.)