When it comes to digital assets, opinions are fiercely divided. While some people believe that Bitcoin (BTC) and other cryptocurrencies are simply a passing fad, others see tremendous long-term potential in this novel asset class. One company that is squarely in the latter camp is Tesla (NASDAQ:TSLA).
In a recent filing with the US Securities and Exchange Commission (SEC), Tesla’s management team reaffirmed its commitment to Bitcoin, dubbing the asset “a liquid alternative to cash.”
The electric car maker invested a total of $1.5 billion in Bitcoin during Q1 2021. This financial move was seen as an opportunity for the company to diversify its investments and maximize returns on its cash that wasn’t being used to maintain liquidity. According to the SEC filing, the electric car maker is still holding onto its BTC from the quarter prior. An excerpt from the latest filing reads:
In the first quarter of 2021, we invested an aggregate $1.50 billion in digital assets. The fair market value of such digital assets held as of March 31, 2022 was $1.96 billion. We believe in the long-term potential of digital assets both as an investment and also as a liquid alternative to cash. As with any investment and consistent with how we manage fiat-based cash and cash equivalent accounts, we may increase or decrease our holdings of digital assets at any time based on the needs of the business and our view of market and environmental conditions.
According to Tesla, Bitcoin represents a viable alternative to cash, offering all of the same benefits but with far greater flexibility and convenience. With an elastic supply limited only by computer algorithms rather than political whims, Bitcoin can more easily respond to market pressures than most traditional currencies. And because Bitcoin trades on a 24/7 global market, it is always available when needed – meaning that businesses can operate around the clock without worrying about having sufficient currency on hand. This gives cryptocurrency advantages over almost all physical forms of money or even credit cards or wire transfers.
With these advantages in mind, it’s no wonder that Tesla has made a conscious choice to embrace Bitcoin as one of its vital financial resources. Clearly, this innovative company sees huge potential in cryptocurrencies and is positioning itself accordingly.
That said however, Tesla’s BTC focus seems to be in stark contrast with Warren Buffet’s views on cryptocurrency. The billionaire investor stated during Berkshire Hathaway’s recent annual shareholder meeting that he wouldn’t pay $25 for all the Bitcoin in the world. This despite BTC’s current market cap printing around $730 billion.
Mexican billionaire Ricardo Salinas Pliego, a Bitcoin supporter and chairman of Grupo Salinas, tweeted Buffet’s clip, adding, “[i]t’s sad to see him rambling on about a subject he clearly does not understand. That’s why the future ALWAYS belongs to the young and not the OLD.”
It's sad to see him rambling on about a suubject he clearly does not understand. That's why the future ALLWAYS belong to the young and not the OLD. https://t.co/2L5Lc8zHjE
— Ricardo Salinas Pliego (@RicardoBSalinas) May 1, 2022
Tesla’s acknowledgement of Bitcoin as a liquid asset is an important step in the mainstream adoption of cryptocurrencies. It signals that businesses are starting to see the value in digital currencies and that they could soon become a more common payment method. This could have a major impact on the future of cryptocurrency, as more people start using it for transactions.
BTC lost 0.77% during today’s trading and changed hands at $38.450, accelerating its weekly decline to about 5%.
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