Financial Times experts Richard Waters and Eric Platt explained why Tesla's Bitcoin (BTC) venture is most likely an inspiring exception than a new normal.
Investing or promo campaign?
According to a recent FT article, the instruments that provide large companies with exposure to cryptocurrency investment instruments are still very limited. Thus, only a few companies put their spare cash into Bitcoin (BTC).
Michael Saylor's Microstrategy is the most notable of them with its $3.2 billion invested in digital assets. FT stresses that the CEO repeatedly described cryptocurrencies purchasing as the "second strategy" of its firm.
Initially, it was designed to accompany MicroStrategy's main business, software distribution. Meanwhile, the case of Tesla's $1.5 billion bet looks different to FT.
As the aggregated capitalization of Tesla surpasses $800 billion, such a "small" investment does not herald Bitcoin (BTC) purchasing as a "second strategy" for Tesla. Rather, it may attract new enthusiasts to Tesla's brand:
...accepting payment for its electric cars in the form of bitcoin could burnish its brand in the cryptocurrency universe. Musk's vocal support for bitcoin and other digital currencies has already brought him a strong following in the crypto world.
A plethora of risks
But at the end of the day, ventures like that look extremely risky for FT journalists. The first category of risk should be attributed to the cryptocurrency's high volatility. The collapse of the Bitcoin (BTC) price would affect the company's earnings.
Should Bitcoin (BTC) go up, it will be challenging for Tesla to realize its profits without violating U.S. legislation.
The unclear legal and tax status of cryptocurrencies would pose more risks to large-scale investors.
As covered by U.Today previously, Tesla's letter to the SEC about Bitcoin (BTC) purchasing catapulted the BTC price to a new all-time high at $48,216.