The few established companies that have added bitcoin to their balance sheets are now starting to see that investment go awry.
It now takes Tesla (TSLA) – Get the Tesla Inc reportthe market leader in high-end electric vehicles.
Tesla invested $1.5 billion in virtual currency on February 8, 2021 and said it was beginning to accept it as payment for buying Tesla cars.
The move came days after Chief Executive Elon Musk temporarily changed his Twitter mini-description to simply #bitcoin. The announcement was a mark of confidence in cryptocurrency.
Bitcoin prices then surged past $42,000.
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Tesla claimed that this investment in bitcoin was aimed at diversifying its sources of liquidity and gaining flexibility in order to be able to reward its shareholders generously.
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But a few months later, in May 2021, Tesla indicated that it no longer accepted bitcoin as a means of payment. He cited as a reason that he wanted to save the environment because minting bitcoins consumes huge amounts of electricity.
If left unchecked, China’s IT mines will produce 130.5 million metric tons of carbon dioxide emissions by 2024, nearly total annual greenhouse gas emissions, according to a Nature study from greenhouses in Italy or Saudi Arabia.
Tesla’s investment is in the red
For several months, Tesla’s bitcoin gamble paid off, especially when the price hit an all-time high of $69,044.77 on November 10. But since then, prices have fallen and are currently hovering around $31,000.
Falling bitcoin price puts Tesla’s initial investment in the red. Indeed, the Austin company seems to have lost money. According to Bitcoin Treasury BondsTesla’s 43,200 bitcoins bought for $1.5 billion are currently valued at $1.35 billion, down $150 million, or about 15%.
What’s wrong with crypto prices?
The company is the only established company whose bitcoin holding value has fallen into the red. But MicroStrategy (MSTR) – Get MicroStrategy Incorporated’s Class A Report, the company with the most bitcoins on its balance sheet, is also not far from losing money. His 129,218 bitcoins purchased worth $3.97 billion are currently valued at $4.04 billion.
Bitcoin and cryptocurrencies are currently suffering from growth fears, as is the stock market. These concerns are prompting investors to liquidate risky assets, as the Federal Reserve raises interest rates to curb inflation.