After Tesla announced it has invested USD 1.5bn in bitcoin and expects to start accepting the cryptocurrency as a payment for its electric vehicles in the near future, the bitcoin price went soaring. It went from around USD 39,400 to an all-time high of over USD 48,000 in less than 24 hours.
The price is now up by over 50% in the first six weeks of 2021. Led by Elon Musk, Tesla’s investment is obviously in profit already: depending on the exact day of the purchase, it is likely to be worth over USD 2bn, pointing to a paper profit of over USD 500m. To put that in context, when the electric car-maker made its first-ever annual net profit in 2020, it was just over USD 700m.
Tesla’s move into bitcoin comes on the back of a wave of institutional money invested in the leading cryptocurrency in recent months, plus numerous other companies putting it into their treasury reserves. With the world’s sixth most valuable company also saying it might buy and hold other digital assets “from time to time or long term”, it must be tempting for other major companies to do likewise. Since the Tesla announcement, Twitter finance director Ned Segal has already signalled that his company is considering such a move, while a research note from the Royal Bank of Canada has made a case for why it would benefit Apple.
The prospect of a bluechip invasion into bitcoin has caused much excitement among cryptocurrency investors. But if Tesla does trigger such a goldrush, there will also be some unsettling consequences.
Read more: Crypto News