Elon Musk Reveals Tesla Will Increase $1.5 Billion Bitcoin Holdings, Boosting The Price
In a series of tweets, Musk said that bitcoin paid to Tesla will be retained as the cryptocurrency and not converted back to dollars, adding to Tesla’s $1.5 billion worth of bitcoin it bought last month.
The bitcoin price, already up by almost double so far this year, jumped on Musk’s announcement, climbing back over $55,000 per bitcoin after losing ground during the last few days.
Currently, only U.S. customers will be able to buy a Tesla with bitcoin, though Musk said bitcoin payments will be available outside the U.S. later this year. He added that Tesla only uses internal and open source software for its bitcoin transactions and operates bitcoin nodes directly.
The bitcoin price has surged by over 700% during the last 12 months, partly due to Musk’s pro-bitcoin and cryptocurrency tweets and Tesla adding bitcoin to its balance sheet—following in the footsteps of U.S. software company MicroStrategy MSTR -8.2%.
“Tesla’s decision to both accept payment for its cars in bitcoin and hold that bitcoin on its balance sheet rather than convert it to dollars will likely build more momentum for the cryptoasset,” Simon Peters, cryptoasset analyst at brokerage eToro, said in emailed comments.
“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.”
Bitcoin has been further boosted by Wall Street institutional adoption and a wave of retail traders keen not to miss out on the rally.
Last week, Deutsche Bank analyst and Harvard economist Marion Laboure predicted “the next two or three years should be a turning point for bitcoin.”
“Bitcoin’s current valuation is pricing in a shift toward cross-border digital currencies; the hypothesis is that bitcoin, as the leader, will benefit from network effects and become an important means of payment in the future,” Laboure wrote in a report on the future of payments.