After stunning the market earlier this year with a bold bet on Bitcoin, Tesla Inc. has now started accepting Bitcoin (the world’s largest electronic currency) as a means of payment for its electric cars.
On Wednesday, Elon Musk, founder and CEO of Tesla, announced that American customers can now buy their Tesla with Bitcoin. This is a significant step for the use of the cryptocurrency in commercial trade. The direct payment option will become available to customers outside the U.S. later this year.
Tesla is using only internal & open source software & operates Bitcoin nodes directly.
Bitcoin paid to Tesla will be retained as Bitcoin, not converted to fiat currency.
— Elon Musk (@elonmusk) March 24, 2021
According to Elon Musk, the cars will be priced globally in dollars, but Tesla will keep any Bitcoin it takes in and not convert it to fiat currency. This shows his confidence in the digital asset and was perceived by some as an accumulation strategy. He hinted at the decision after the initial Bitcoin investment of $1.5 billion.
Cryptocurrencies are here to stay
Tesla’s enthusiasm for Cryptocurrency fuelled a debate over whether longer-term investors such as corporate treasurers, family offices and insurers should also venture into the terrain. While prominent Wall Street figures have spoken out in favour of Bitcoin, there are big challenges for any companies that want to follow suit, and add virtual currencies to their balance sheets.
“Tesla and other companies are showing that crypto is here to stay, and its mainstream adoption is only going to increase. In terms of market dynamics, as more companies hold bitcoin on their balance sheet, so the finite supply is depleted even more, and this is likely to cause a supply-side squeeze and boost prices over the longer-term.” – Simon Peters, Analyst eToro
Musk’s Bitcoin enthusiasm fits his outsider image. The billionaire has tweeted often about cryptocurrencies and praised Bitcoin in a recent interview. Dogecoin, a pure “meme coin,” also soared to records in February after Musk and several other celebrities tweeted about it.