Elon Musk is at it again! Tesla’s main man isn’t a stranger to some strange and quite scandalous behavior, but his most recent move takes the cake. In a recent report, Tesla announced that it had bought a substantial amount of cryptocurrency bitcoin: $ 1.5 billion, to be exact.
This comes after just a week when Musk was seen as instrumental in the skyrocketing of bitcoin (as well as dogecoin) prices. But what is bitcoin? Bitcoin is a type of cryptocurrency founded as early as 2009 by an anonymous individual under the alias Satoshi Nakamoto. It is a type of currency that is slowly becoming accepted for various transactions worldwide. The value is based on the fact that no governing body in any country regulates its use.
As you may have picked up, “crypto” means it exists only in the digital space. By using real currency, people have taken to investing in virtual money, and this has further affected (mostly in a good way) bitcoin’s value. Continuous trading has caused a rapid growth of bitcoin, and just so we have a local and Philippine-level understanding, 1 bitcoin is equal to about PHP 2.225 million. Wow.
Right, so back to Elon and Tesla. 1.5 billion US Dollars is no joke, but according to Musk, the purchase of bitcoin is for “more flexibility to further diversify and maximize returns on our cash”. Tesla also said that it will soon start accepting bitcoin for the purchase of their products “subject to applicable laws and initially on a limited basis”. Since we mentioned that bitcoin is an unregulated currency, we have no idea what “applicable laws” there are, but we’ll have to wait and see.
The bigger picture here is that before the purchase, Tesla reportedly has $19 billion in cash and cash equivalents at the end of 2020. The $1.5 million investment represents a significant portion of the company’s liquidity, then. With cryptocurrency – particularly bitcoin’s – volatile nature, it’s curious why Tesla would allow, and for Musk to even initiate such a move.
If this is a move by Elon Musk to make Tesla more money, then this is all well and good. Taking a step back to look at the more pressing issue and how it relates to us: how will this help Tesla as a car manufacturing company and brand? Primarily they are a company that focuses on clean and sustainable energy as a means to power cars. In recent years, they’ve even explored energy solutions for home and even industrial use, but really, how can it benefit Tesla?
Research and development cost a pretty coin (no pun intended), and maybe that’s something Tesla plans to invest more in eventually. Materials for their cars, production costs, marketing costs, those have a pretty high price, too, so being crypto-liquid may work in Tesla’s favor.
Again, Elon Musk has made some questionable moves, but this one with bitcoin leaves a lot of windows open, and questions hanging. Much like everyone in the world, and most probably the Tesla Boardroom, we’ll just have to wait and see. Besides, last we checked, bitcoin just shot up a couple of more points again.