Elon Musk’s Tesla Motors has officially invested $1.5 Billion in Bitcoin. The popular cryptocurrency will soon receive yet another endorsement as the company will start accepting Bitcoin as a payment option.
Tesla Motors has bought a substantial amount of bitcoin. The company insists the investment is to further diversify and maximize returns on its cash. But will the investment hurt the company’s “green” badge?
With Elon Musk’s endorsement of cryptocurrency, Bitcoin crosses an important milestone:
In a filing with the Securities and Exchange Commission, Tesla Motors confirmed it has bought $1.5 Billion worth of Bitcoin. The company notes the investment was intended to offer “more flexibility to further diversify and maximize returns on our cash.”
In addition to the seemingly large investment, Tesla Motors also confirmed that it will start accepting payments in the cryptocurrency in exchange for its products “subject to applicable laws and initially on a limited basis.”
— Cointelegraph (@Cointelegraph) February 8, 2021
Needless to add, with this decision, Tesla will be the first major automaker to accept cryptocurrency as a payment option for its vehicles. Incidentally, the $1.5 billion worth of bitcoin should give Tesla the necessary liquidity in the cryptocurrency once it starts accepting it for payments.
— Benjamin Arnulf (@BenjaminArnulf) February 8, 2021
With the announcement, Bitcoin prices spiked 14 percent. The prices also hit a new all-time high of $44,900 before dropping slightly. Even the shares of Tesla moved higher by about 2 percent.
While Tesla Motor’s announcement is a reason for the rally, Elon Musk has been seemingly nudging the prices of cryptocurrencies higher with this Tweets. The Tesla Motors CEO has been sending out not-so-cryptic Tweets promoting cryptocurrencies like Dogecoin.
Will mainstream adoption of cryptocurrency hurt Tesla Motor’s “green” badge?
There’s little doubt that Elon Musk and Tesla Motor’s affinity towards Bitcoin is a major boost to the mainstream adoption of cryptocurrencies. On the other hand, many governments still have highly skeptical views of cryptocurrencies.
Tesla Motors has certainly contributed to the growing adoption of Bitcoin and other cryptocurrencies in the near future. However, it may hit the company in the unlikeliest of places.
— Karthik Konaar (@karthikkonaar95) February 8, 2021
Tesla Motors makes all-electric vehicles. Buyers often pay a premium to buy the Tesla Model S, 3, X, and Y. Oftentimes, these cars come with a premium that towers over the gasoline-powered four-wheelers.
Buyers willingly pay the premium because they perceive the vehicles that Tesla Motors makes as “green” and environmentally friendly. However, Bitcoin and other cryptocurrency have earned a very bad reputation when it comes to protecting the environment.
Bitcoin jumps to record $44,000 as Tesla invests $1.5 billion.
— Bloomberg (@business) February 8, 2021
Cryptocurrency is mined using power-hungry computers. The mining process devours a lot of electricity and generates a lot of heat. Some experts even claim that Bitcoin transactions need a lot of electricity to execute and store owing to the block-chain technology.
Reports estimate Bitcoin is using around seven gigawatts of electricity. This is roughly equal to the electricity demand of Switzerland. All this activity contributes to global warming and climate change.
The electric vehicles that Tesla Motors makes are way better than their gas-guzzling counterparts. However, will the company attempt to offset the environment impact of Bitcoin?