What does Tesla buy bitcoins for the cryptocurrency market?

At the end of 2020, the first known announcing company listed on the stock exchange buying bitcoins was MicroStrategy. To date, the value of bitcoins it has acquired has exceeded $ 1 billion, and at the time of writing this article, the number of bitcoins it holds was over 70. Since its first bitcoin purchase in September 000, MicroStrategy's stock has risen more than 2020%. In October, MicroStrategy was joined by the American company Square, which specializes in processing payment transactions, acquiring bitcoins worth USD 50 million. Michael J. Saylor, co-founder and president of MicroStrategy, has spoken frequently about bitcoin since the first purchase, and some time ago he even held a conference to educate entrepreneurs about bitcoin accounting. Several thousand companies reportedly participated in this conference. Michael J. Saylor has often voiced the opinion that bitcoin is an escape from inflation due to the fact that bitcoin's supply is constant - something that cannot be said for the fiat money supply.

About the Author

Mads Eberhardt, Cryptocurrency Market Analyst, Sax Banks. Cryptocurrency Market Analyst at Saxo Bank. He gained experience as a trader at Bitcoin Suisse AG and founder http://BetterCoins.dk (website taken over by Coinify).

Elon Musk has been positive about bitcoin for many months

Elon Musk has been speaking positively for many months - in the media, but most of all on Twitter - about bitcoin. Currently, however, he broke his own records, practically making fun of the cryptocurrency area in numerous comments on the topic dogecoin. However, with regard to bitcoin, he changed his tone a few months ago and began to speak more positively. A few weeks ago, he mentioned bitcoin was a good thing - and declared himself a supporter of the cryptocurrency. He added that he "joined the party late" and then updated his Twitter profile to only include the hashtag #bitcoin. In a December statement on Twitter, he even asked Michael J. Saylor if "such large deals are even possible?"

The story of Tesla-Bitcoin was only a matter of time

Given that Elon is Elon, and has spoken out actively about bitcoin in recent months, the story of Tesla-Bitcoin it was only a matter of time. The culmination of the saga about bitcoin buying companies happened on Monday when Tesla announced that it has acquired $ 1,5 billion worth of bitcoins. Although the event was to some extent predictable, Tesla's deal must have surprised even the most enthusiastic bitcoin maximalists given its value. Tesla is certainly taking a significant risk as bitcoin is still a highly volatile and risky asset and will remain so for the foreseeable future. At the same time, Tesla announced its intention to accept bitcoin in the future as a means of payment for its cars and energy-related products.

Others will most likely follow Tesla

Elon Musk is perhaps the most famous person in the world, and Tesla - one of the most attractive companies; the press follows every move they make. The moment of buying bitcoins was no exception after this information appeared in all the world's media. In my opinion, this was the most exciting news in this area since Satoshi Nakamoto's Bitcoin White Paper in 2008. Likewise, the market felt the same as bitcoin's price immediately rose 10% and tested a new record high of $ 48 on Tuesday. Following the publication of this news, Elon Musk promptly removed the bitcoin hashtag from his Twitter profile, perhaps to avoid problems with US Securities and Exchange Commission (DRY).

After Tesla acquired bitcoins and the MicroStrategy conference, other companies are likely to follow. Whether the goal is to escape inflation, to print money through the Federal Reserve, or to gain media coverage, more publicly traded companies will include bitcoin on their balance sheets.

Will the Fed or other institutions take a stance on buying bitcoins?

Like other central banks, the American Federal Reserve she cannot be delighted with recent reports, especially if buying bitcoin from her own savings becomes the norm for businesses. If this becomes the new normal, the most important factor will be the reaction of central banks and other government institutions. Will they ultimately settle this issue by banning bitcoin, or will they not raise it at all, allowing companies to freely dispose of cryptocurrency? As regulations and responses from global governments are not yet known, the drive to buy bitcoins, particularly by companies, comes with unique risks.

Does bitcoin fit in with Tesla's philosophy?

Another aspect that, in my opinion, is not raised in the public debate is whether bitcoin fits in with Tesla's philosophy. The bitcoin network is increasing energy demand more and more with the processing of transactions on the network and the mining of new bitcoins. It is estimated that one bitcoin transaction generates the same amount of CO2 as more than 700 transactions with Visa cards. Because Tesla's mission is "Accelerating the global transition to sustainable energy", the question is whether bitcoin really fits into this philosophy. Will Tesla therefore pay off in taking significant financial risks - and, more importantly, putting its own brand and philosophy at stake to gain media exposure and perhaps save itself from inflation?