Elon Musk’s cryptocurrency hype was more than just idle talk. CNBC reports that Tesla not only bought $1.5 billion worth of Bitcoin to help “diversify and maximize” its returns, but will start taking payments using the digital asset sometime in the “near future.” It’s the first major car maker to take Bitcoin for purchases. although the company didn’t say if this would apply to every product.
Tesla was quick to warn investors that cryptocurrencies like Bitcoin tended to be “highly violatile,” with rapid price changes and theoretical vulnerability to regulatory changes, “malicious attacks” and “technological obsolescence” that doesn’t exist with physical formats. Musk was conscious of his own effect on Bitcoin, warning in a Clubhouse chat that he could “move the market” if he wasn’t careful.
Not surprisingly, Tesla’s move just did that, sparking a Bitcoin price surge to over $44,000 as of this writing.
There’s a clear advantage to embracing Bitcoin — Tesla can court newly minted cryptocurrency millionaires itching to spend their fortunes on a new Model S. The investment is something of a gamble, though. The $1.5 billion represents a significant portion of Tesla’s roughly $19.4 billion in cash, and it’s entirely possible that money could evaporate if Bitcoin prices plunge. The automaker clearly hopes Bitcoin has a bright future, and that committing to the format helps legitimize it.