Is Tesla still plugged into Bitcoin?
|The prices of cryptocurrencies including Bitcoin, the most popular of the lot, have been highly volatile in recent months due to conflicting regulatory signs and rising interest rates.
Despite the massive sell-off of digital tokens, Tesla (NASDAQ: TSLA) CEO Elon Musk is among those who are still bullish on digital currencies. As such, the recently reminted $1 trillion dollar company is caught in the crosshairs of movements in the cryptocurrency market.
Bitcoin price crash
After reaching an all-time high of $67.5K in November, the price of Bitcoin is now hovering around $40K since the start of the year. The crash is partly due to remarks from the US Federal Reserve about launching its own digital currency similar to China’s e-renminbi and US President Joe Biden’s recent order directing government agencies to coordinate on a regulatory framework for digital currencies.
While the regulatory forces mentioned above have helped to suppress any upside in digital assets, the largest contributor in the price crash of Bitcoin is the about-face that Musk, and by association Tesla, pulled for its support of Bitcoin. In a way, those cryptocurrency crosshairs are attached to the rifle wielded at times by Musk and Tesla.
Tesla’s $1.5 billion Bitcoin stash
Last year, Tesla revealed that it invested a total of $1.5 billion in Bitcoin and hinted that it may acquire and hold digital assets “from time to time or long-term.” Since that announcement in February 2021, the company has had no additional Bitcoin purchases.
Tesla disclosed in its 2021 annual report that it still held around $1.26 billion worth of digital assets and incurred $101 million of impairment losses on its digital assets.
At the same time, the EV leader also reiterated its confidence in the long-term potential of digital assets both as an investment and as a liquid alternative to cash. However, the carmaker warned, in an ambiguous statement, that it may boost or reduce its digital asset holdings based on its business needs and on its view of market conditions. However, knowing Tesla dependency on Musk as its “product architect and social media manager”, as quoted by Bloomberg, the company’s position on digital currency’s may be far closer aligned with his own personal view than the above statement suggests.
Over a month after the company’s disclosure, Musk on Twitter said he still owns and “won’t sell” his own personal Bitcoin, Ethereum or Dodge holdings, stressing that “it is generally better to own physical things like a home or stock in companies you think make good products, than dollars when inflation is high.”
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