Flame animation

Hottest new
meme coin

Flame animation
Coin spinning animation

100x potential

Shiba Memu Roll-out Logo BUY NOW

Tesla helping Bitcoin become a reserve currency?

on Feb 10, 2021
Updated: Dec 19, 2022

The week started with a boom as Tesla announced that it bought $1.5 billion worth of Bitcoin in January. We already covered the story in one one of yesterday’s articles, but it still feels like there is more to say. While yesterday’s focus was on Tesla, today’s we shifted the attention to Bitcoin. 

Tesla to Accept Bitcoin as Payment for Cars

Copy link to section

What is interesting about Monday’s announcement is that Tesla said that it would accept Bitcoin as payment for cars. In other words, Bitcoin is money for Tesla and, thus, for Tesla fans – and they are many.

However, Bitcoin as currency or money lacks the foundation of it. One of the characteristics is to be a unit of account – or a stable unit of account. Another is to be a means of payment. Finally, to be a store of value.

Tesla’s announcement means that Bitcoin can be a means of payment. In fact, it is, as transactions in Bitcoin are common and are more by the day. How about a store of value? It cannot be – between the 8th and the 27th of January it declined over 30%. No serious business can plan its budget for the year ahead using a “currency” with such volatility. The same we can say about the unit of account.

Another interesting take on Tesla’s Bitcoin investment announcement is that it is truly ironic. Tesla is viewed as a green company, the one to change the auto industry. Yet, it is evaluated at a P/E ratio of 1747, on the basis of last year’s profit. In comparison, Apple, which recently announced plans to develop the AppleCar together with Hyundai, trades at 16x P/E.

Now, the irony comes from the huge amount of electricity needed to run the Bitcoin network. Bitcoin consumes 118 kWh for a single transaction, according to a joint study by Stanford University, the University of Stockholm and Coindesk, among others. In comparison, a transaction using Visa (USD), consumes 0.00649 kWh.

Are you looking for fast-news, hot-tips and market analysis? Sign-up for the Invezz newsletter, today.

Until the world finds out a solution to compensate for such a huge gap, the move Tesla made will be viewed with skepticism. A company fighting for green energy suddenly stands for exactly the opposite.

At the current Bitcoin price, Tesla sits on a profit bigger than all the profit it has made in the last decade or more since it exists. What if this is not a long-term investment and Tesla just traded and speculated on an asset?


Get started in crypto easily by following crypto signals & charts by pro-trader Lisa N Edwards. Sign-up today for easy-to-follow trades for tonnes of altcoins at GSIC.