What date is Tesla investing in Bitcoin?

Bittime - Tesla has revealed more about the reasons behind their large bitcoin purchase. On the company's first-quarter 2021 earnings call, chief financial officer Zach Kirkhorn answered questions about the company's digital currency plans. In his response, he explained why the company announced on February 8 that it had purchased $1.5 billion worth of bitcoin.

The Reason Behind Tesla's Bitcoin Purchase

Kirkhorn explained that he and Elon Musk were looking for a place to store cash that wasn't used immediately, trying to get a rate of return but also maintain liquidity. These comments follow CEO Elon Musk's seemingly increasing interest in bitcoin. In February 2019, he described the cryptocurrency's structure as "absolutely brilliant," but added that "it's very energy-intensive" and he was "not sure it would be a good use of Tesla's resources to get involved in crypto."

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Elon Musk's Change of Views

However, it seems his views have changed this year. In January 2021, Musk added the word "bitcoin" to his Twitter bio. The following month, after Tesla announced its bitcoin holdings, Musk wrote on Twitter that money was "just data that allows us to avoid the inconvenience of bartering."

"That data, like all data, is subject to latency & error," he wrote. "Systems will evolve to minimize both."

Financial Motivation Behind Purchase

However, Kirkhorn's comments suggest that Tesla's bitcoin purchases were driven more by financial reasons than a belief in the future of money. Kirkhorn, who was named “master of coin” in March 2021, explained that “being able to access our cash very quickly is very important to us right now.”

Impact of Bitcoin Purchase on Tesla's Expansion Plans

Bitcoin prices have soared in recent months. This is expected to be especially important as Tesla works to expand over the coming year. The company aims to start production at two new plants later this year, one in Texas and one in Berlin. Tesla also plans to begin production of their Semi trucks, with large-scale production of the Cybertruck following next year.

Tesla, Kirkhorn said, is also paying attention to global issues such as port capacity and semiconductor shortages. On this front, they announced in their earnings report that they are switching to new microcontrollers to avoid the worst impacts of the ongoing shortage.

Tesla Supports Cryptocurrencies

While Tesla's main motivation may be looking for a place to put their cash, they are also trying out full cryptocurrency support. On March 24, Musk announced via Twitter that customers can now buy cars using bitcoin.

"There's a lot of reasons for optimism here," Kirkhorn said. "We're certainly watching it very closely at Tesla, looking at how the market is evolving, listening to what our customers are saying."

Financial Benefits of Bitcoin Investment

Inverse analysis shows that Tesla's reason for buying bitcoin seems relatively simple - they want to invest where there is liquidity. It also seems to have paid off, as prices have risen 25 percent since the day Tesla announced its purchase.

However, bitcoin's energy use, about which Musk expressed concerns in 2019, remains an issue. These cryptocurrencies encourage “miners” to process transactions by offering bitcoins as rewards. This requires miners to organize their computers to solve complex problems. If their block is accepted on the blockchain, they receive bitcoins as a reward.

Environmental Challenges and the Future of Bitcoin

In a paper published in the journal Joule in March 2021, data scientist Alex de Vries argued that bitcoin mining would likely exceed annual energy consumption by 101 terawatt-hours.

But Musk suggested that bitcoin could have some positive effects on electricity. On April 22, in response to a tweet from Twitter CEO Jack Dorsey that said "bitcoin drives renewable energy," Musk wrote "true."

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Conclusion

Musk still owns his own bitcoin. In February 2018, he wrote that a friend sent him 0.25 bitcoins "a few years ago." This month, he confirmed that he had not sold his bitcoin.

However, while the CEO has increasingly mentioned the cryptocurrency Dogecoin, most recently in a Twitter post about his upcoming appearance on Saturday Night Live, Musk may not feel attached to bitcoin as the only cryptocurrency that matters.

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