One of the biggest developments in the crypto market came just a few weeks ago, when the automobile giant Tesla announced that it had bought $1.5 billion worth of Bitcoin. Elon Musk, the CEO of Tesla, has long been an advocate for cryptocurrencies, and this was just the latest in a number of actions taken by him to show support for cryptocurrencies. However, this announcement had a huge impact, since Bitcoin broke a new price record after the announcement of Elon Musk about Tesla’s investment in Bitcoin. Additionally, the car giant had also announced that customers would soon be able to make payments for their Tesla cars through Bitcoin and other cryptocurrencies, and that development looks like it has finally arrived.
Musk announced last week that it will now be possible to purchase Tesla vehicles in the USA with Bitcoin, which is likely to be an extremely popular development for both the company as well as the cryptocurrency market. There is a support page on the Tesla website which explains how customers can pay for their cars through Bitcoin – one token of Bitcoin is currently at around $55,000, while Tesla’s cars sell for between $37,990 and $124,000 before tax. This ability to buy Tesla cars with Bitcoin will reportedly be extended to other countries later this year, but there is no knowledge yet on which countries those will be.
According to Elon Musk, Tesla is using internal, open source software to process these payments, while the company is also operating bitcoin nodes directly. The refund policy is interesting to look at as well – Tesla states that it can pay customers back in either US dollars or Bitcoin if they choose to return their vehicles, with the company reserving the right to refund customers in dollars at the exact price that Bitcoin was worth when the car was purchased. This will add an interesting dynamic to the refund process, as Tesla may even choose to make refunds in the form of Bitcoin if the token is worth less than it was when a particular car purchase was made. However, in general, giving the bullish nature of the token and its steadily increasing price, it is unlikely that Tesla will make refunds in the form of Bitcoin.
Most industry observers and experts were expecting Tesla to only begin accepting Bitcoin payments towards the end of the year, so this move has come as a pleasant surprise, which can be a catalyst for the cryptocurrency sector as well as for Tesla’s own ecosystem as well. It is expected that less than 5% of all Tesla purchases will be made with Bitcoin over the next 12-18 months; however, this could increase at a rapid rate later as cryptocurrency acceptance begins to rise.
However, there is a bit of a paradox between Tesla’s environmentally-friendly company and the carbon footprint of Bitcoin and other cryptocurrencies. Tesla manufactures electric cars at a scale that has not yet been matched by any other company, while Bitcoin mining globally has been reported as using more electricity than the whole of Argentina on an annual basis. It has been estimated that Bitcoin emissions alone could push global warming above 2 degrees Celsius, which is the agreed limit for countries to try and stop temperature increases by the signatories to the Paris Climate Agreement. Thus, it has been slightly puzzling to see Musk’s enthusiasm for Bitcoin and other cryptocurrencies. Nevertheless, Musk is probably the biggest business supporter of crypto, and with Tesla’s mammoth purchase of bitcoin earlier, the company’s share price is also now tied to the price of Bitcoin. It will be interesting to see if this continues, as both Tesla and Bitcoin have seen a huge increase in their price over the last 12 months or so, with many observers speculating that this is a bubble that is going to burst soon.