Elon Musk recently stated that Tesla Inc. took the initiative of selling off 10% of its Bitcoin holdings to prove the token’s liquidity. He also stated that he has to hold on to the personal investment he had made in the cryptocurrency.
The earning reports of Tesla showed that the company managed an earn a revenue of $101 million from the sale. It must be noted here that the company had earlier bought over $1 billion of the tokens. Musk used Twitter as a platform to announce that Tesla has been making efforts to “to prove liquidity of Bitcoin as an alternative to holding cash on the balance sheet.”
The company, which specializes in the manufacturing of electric vehicles, coaxed corporate treasurers into including cryptocurrencies into its overall agenda by making a significant investment in the Bitcoin space. A large number of people still consider the token to be too risky and speculative as compared to cash. Zachary Kirkhorn, CFO at Tesla, has stated that the company has a lot of belief in the long-term value of Bitcoin.
So am I understanding this correctly? @elonmusk buys #bitcoin. Then he pumps it. It goes up. Then he dumps it and make a fortune. Listen I own 1 #Bitcoin but #bitcoin is exactly who we thought it was. Just don’t be last 1 #HODLing the bag.
— Dave Portnoy (@stoolpresidente) April 26, 2021
What Do the Strategists Say?
Like the general public, most financial strategists Bitcoin and similar types of tokens should be considered speculative investments. At this moment, they believe, they cannot be looked upon as cash alternatives. Many of the strategists and agencies have even managed to come up with material that backs their claims. BCA Research Inc. has categorically stated that Bitcoin doesn’t really deliver as a unit of account or store of value simply because of the fact that it is extremely volatile and unpredictable.
The world’s largest cryptocurrency saw a jump of 1% to $53,765 at 12: 16 p.m. This happened in Tokyo on Tuesday. Though has seen a marginal fall from its peak of $64,870 in April still, these are good figures. After the results came out on Monday, Tesla registered a fall of 3.1%. This happened despite the company registering a healthy profit in the first quarter.
Not a Profitable Move?
A recent development must have acted as a dent in the company’s plans to invest further in Bitcoin and encouraging others to do the same. Tesla Inc has just registered an impairment loss of $27 million on its Bitcoin investment. The company confirmed this in a filing today.
Nexon Joins Forces with Tesla
Nexon co. recently announced that it has purchased Bitcoin amounting to $100 million. It has now become one of the multiple tech companies that are using this digital currency. The company, which primarily deals in online gaming, has bought 1,717 Bitcoins. It has roughly paid $58,226 for each Bitcoin, including fees and other expenses. This particular purchase accounts for less than 2% of the total cash and cash-based equivalents at Nexon’s disposal. What is remarkable is the fact that it is the largest ever purchase that a company has made in the Bitcoin space.
In the last couple of months, a large number of global firms including Square Inc. and Tesla Inc. have bought Bitcoin. This signifies that slowly and steadily large corporations are accepting this cryptocurrency as a mode of payment.