Tesla Unveils New Bitcoin Payment Strategy

Tesla CEO Elon Musk’s history with cryptocurrency, namely Bitcoin, is nothing less than intriguing. He’s incited massive pumps in the market, sent the prices tumbling down, and spearheaded some of the strongest crypto fluctuations this year. 

Adding onto his list of semi-controversial decisions, Elon Musk announced on Wednesday that Tesla would begin accepting Bitcoin as payment for their vehicles.

The move itself came as no surprise, as Tesla’s strategy has involved bullishly pursuing Bitcoin. Even recently, Elon Musk made a shocking decision to allocate 7.5% ($1.5B) of Tesla’s cash resources towards buying the crypto, a move that raised multiple questions about the extent of his alleged genius. 

Transactions will typically involve less than 1 Bitcoin, as the currency entailed a staggering price tag of $54,807.50 today. 

Elon Musk’s strategy towards Bitcoin seems to be evolving into something even more aggressive than it once was. More surprisingly, however, is what they plan to do with it. 

Believing that the currency is on the brink of acceptance from general finance figures, Tesla announced that none of the transactions would end with the received Bitcoin being converted back into paper currency.

With this stance, the price of Elon Musk’s cars will begin to fluctuate. You may pay $40,000 worth of Bitcoin initially, but that same quantity may be worth $45,000 by the end of the week. 

Similarly, there’s always a chance of the investment going bust and the cars being sold for a price that soon becomes lower than the intended manufacturing cost to revenue ratio. Thereby, this move implicates two key points:

Tesla’s profit margins are very flexible.

If the pioneer of electric vehicles is willing to turn each transaction into an investment, they must be unbothered by the prospect of losing a bit of profit. Even though they may be cutting into a margin that already decreased last quarter (falling from 9.2% to 5.4%), Tesla’s strategy is clearly aimed towards the long-term. 

Elon Musk’s stance on Bitcoin has developed into a serious investment.

Investing on behalf of yourself is one thing. Investing directly through your company, however, sends a more vital message. Not only has Elon Musk put $1.5B into Bitcoin on behalf of Tesla, but he’s built an even more aggressive stance that hinges the majority of Tesla’s profitability on the success of this crypto.