Yes, You Can Now Buy Tesla with Bitcoin (BTC)
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A long-awaited announcement was made this March, as finally Elon Musk, technoking of Tesla, Inc, officially stated the company would accept BTC for Tesla purchases.
The BTC payment option will be available for US clients first, and later for international buyers. At this point, BTC remains a freely used asset throughout the globe, with few states restricting ownership. The move may open up Tesla purchases for a wider audience.
Musk, who initially mentioned Dogecoin (DOGE) in a cheeky way, moved in as a serious BTC owner just months after, triggering buying from levels of $38,000 per BTC.
Additionally, Tesla has announced it also runs the Bitcoin software and supports a full node, thus being able to ensure its balances even further. This makes Tesla an important piece of the Bitcoin network security, as reliable and accessible nodes increase the reliability of the distributed ledger.
The news follows the widely publicized decision of Tesla, Inc. to use some of its treasury funds to buy BTC. Following the news, TSLA stock traded at $662.16, still down from its peak above $880 from the start of the year. Crypto traders noted that as the company announced its BTC purchase, its stock price started to slide.
The price of BTC at the time the news dropped was $55, 535, hovering at that level for a few days after a dip from another hike near $60,000. At this price range, buying a Tesla would cost less than 2 BTC, pocket change for some long-term holding “whales”.
Buyer Regrets?
The chief case against using BTC for purchases is long-term buyer regret. As BTC peaked to record prices above $61,000, old records of purchases surfaced, where a handful of BTC spent on electronics or even pizza would cost a fortune today.
Not unusually, BTC has already been used to buy Tesla cars in the past, when the BTC price hovered just under $1,000 and the purchase cost about 100 BTC ($5.5M at current prices).
So will a Tesla purchase bring regrets? When it comes to the case for hyperbitocinization, where BTC will replace many processes in the global economy, some foresee a future where BTC is worth millions of dollars.
In a later tweet, Musk also noted that the company intends to hold onto the BTC and not convert it to cash. The company was already cash-rich before its decision to buy the leading crypto coin, with a treasury above $7B.
The decision to hold onto the coins is even more encouraging, an indicator that the company does not intend to dump the coins for more fiat.
Buying Tesla Car Same as “Hodling”
The immediate reaction on social media showed the news as potentially bullish. Any BTC spent on owning a car will be removed from trading and circulation, deepening the coin scarcity.
The production of electric cars has been picking up, and in the last quarter of 2020, the company put to market just below 180,000 new vehicles. At this rate of production, and a rough price of 1 BTC per car, the production for one quarter would be roughly equivalent to the BTC mined in two months.
There are still no data on completed Tesla purchases with BTC, but the coming months will show if this option takes more coins off the market.
Why TSLA Wants BTC?
In the past, Musk said he finds BTC indistinguishable from cash. Currently, owning BTC is indeed having access to a highly liquid asset. Large-scale owners also have access to OTC trades, where large wallets can be converted to fiat without market slippage, based on an agreement of two parties.
But so far, no one has identified the wallet or wallets where TSLA stores its BTC. For the most cases, ownership of BTC is identifiable, and there are well-known “whale” wallets belonging to exchanges or large-scale investors.
New Corporate Whales Appear
For BTC, there is a shift in wallet ownership. Small-scale whales are selling off their wallets of under 100 BTC, while larger buyers are accumulating. The trend has started in earnest in 2021, and accelerated after Musks’s public announcement and endorsement of crypto assets.
Data from CryptoQuant revealed growing outflows from exchanges, with large-scale buying for long-term holding.
Miners also seem to be holding onto their coins, instead of selling immediately to cover their costs.
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