Tesla Buys $1.5B in Bitcoin, Will Accept as Payment

[CertLive]

The essence of the conversation is whether buying 1.5 billion of BTC is the best use of Tesla's money.

When you've pissed off the Chinese and they want to recall your Model 3's...

When you've pissed off tens-of-thousands of your loyal early adopters with the Model S screen fiasco... (including me)

When you admitted in an interview a week ago that you (as in Elon Musk) would never buy one of your cars fresh off a newly tooled assembly line...

I am thinking there are better places to invest that cash. Like... into your company.

Actually I was surprised about that the fact there is a period when its not a good time to buy a Tesla during manufacture... so they are in full knowledge ignoring faulty cars and buying environmentally unfriendly bitcoin is the way forward for the industry. I know with my model 3 fiasco too. You hope for better but the whole thing right now is expansion over quality of product. Even if the bills are paid on carbon credits and dino juice guzzling bitcoin mining. Needs to change actually maybe even the leadership does.

 

[AdamMacDon]

I'm not really sure why you quoted me and directed this at me when 1) I never said the USD couldn't tank in value and 2) I'm not anti-BTC. That's quite the strawman you've erected though.

I didn't direct the message to you personally except in my first paragraph were I was replying to "I'm merely pointing out that to make such large financial risks without any consideration". As if Tesla sank $1.5B into something with no consideration. That you consider my reply a strawman is quite interesting. I read previously in the thread that you hold BTC (unless that was a joke), so I figured you are not in fact anti-crypto. However, discussions about wild hypotheticals with no prior data to back them up do seem to be a bit inane, and that is directed at persons besides yourself.

The essence of the conversation is whether buying 1.5 billion of BTC is the best use of Tesla's money.

When you've pissed off the Chinese and they want to recall your Model 3's...

When you've pissed off tens-of-thousands of your loyal early adopters with the Model S screen fiasco... (including me)

When you admitted in an interview a week ago that you (as in Elon Musk) would never buy one of your cars fresh off a newly tooled assembly line...

I am thinking there are better places to invest that cash. Like... into your company.

Maybe I misunderstood. I was under the impression that the debate was focused on is holding BTC better than holding cash, or is it just a casino game or similar to "investing" in GME or other meme stocks. I agree 100% that Tesla has some serious problems to address. However on this topic I admit I am ignorant. I have never built an electric car company and my startup has but 4 employees. So instead of asserting I know better than Tesla's... wild CEO, I will see myself out.

 

[acal]

There's not enough bitcoin in the world's currency supply to guard against price manipulation. It will eventually crash and people holding it will lose their a$$ets, once those who are pumping it decide to dump it.

why? so there aren't enough whole bitcoins. Fine. price inflates by 100x and the unit of trade becomes 1/1000th of a bitcoin.

I'm not a BTC fan, but this isn't a reason to be against it.

 

[Just a Reader]

So can you also tell us how much energy the conventional finance system consumes? I'm sure all the HFT machines and millions of bank locations run off of fairy dust. I'm also sure those banks and trade buildings were also built with carbon neutral methods. Honestly, this argument is very reminiscent of when people tried to claim EV's actually create more CO2 emissions than gas cars. Is BTC super efficient? No. But without comparing it to the total energy use of conventional finance, you have nothing useful, just hand wringing. Crypto technology will continue to improve in efficiency, just like conventional finance has.

Regardless, if more countries weren't foolishly abandoning nuclear or regulating the crap out of it so as to make it economically senseless, this wouldn't be a problem at all. Per TWH, nuclear is one of the safest options, with more deaths being caused by rooftop solar than fission power. But of course, lets blame BTC for this and not our politicians who make knee jerk emotional reactions after a mild incident occurs. Source: Mortality rate globally by energy source 2012 | Statista

One BTC transaction does not use that much energy. It certainly does not "wipe out the good" Tesla has done for reducing carbon emissions. A SpaceX rocket launch is far more harmful and I don't see people complaining about that (not that I condone complaints about that either).

In my understanding it is the very point of Bitcoin that it can't be "mined" more efficiently. Bitcoin relies on complex calculations to maintain its value. There is probably a reason why Bitcoins are mostly mined in counties with authoritarian governments now, as the tolerance of people to see new power stations being built in order to increase the mining of Bitcoins will be limited. However, perhaps you want to volunteer to have a nuclear power station being built in your neighbourhood for that purpose?
As to the energy consumption of the regular financial system, that's a rather ridiculous attempt. So far Bitcoin isn't really more than a niche within a niche.
Finally, whatever your position on spaceflight, at least rockets deliver physical stuff into space, while Bitcoin has to prove that it serves a purpose first.

 

[AdamMacDon]

In my understanding it is the very point of Bitcoin that it can't be "mined" more efficiently. Bitcoin relies on complex calculations to maintain its value. There is probably a reason why Bitcoins are mostly mined in counties with authoritarian governments now, as the tolerance of people to see new power stations being built in order to increase the mining of Bitcoins will be limited. However, perhaps you want to volunteer to have a nuclear power station being built in your neighbourhood for that purpose?
As to the energy consumption of the regular financial system, that's a rather ridiculous attempt. So far Bitcoin isn't really more than a niche within a niche.
Finally, whatever your position on spaceflight, at least rockets deliver physical stuff into space, while Bitcoin has to prove that it serves a purpose first.

Actually, per capita more bitcoins are mined in Iceland than anywhere else. I don't think that country quite qualifies as an "authoritarian state". Cheap geothermal (carbon neutral) power, and free air conditioning just by opening a window makes it a no brainer. Also Iceland has very low crime (less risk of server theft). Also, BTC is only one of many different crypto currencies, with more efficient options available. It is reasonable to assume that with time, we will adopt more and more efficient standards. BTC is king now, just like the Model T Ford was a century ago. A different story today

I'd prefer a nuclear power plant in my backyard over a coal/gas power plant any day. I believe in statistics, not fear mongering. The coal power plant is certain to affect your life, the nuclear power plant not so much. However, since I live in a city center, building a power plant of any kind here makes very little sense, it would be wiser in either case to build it where land is more affordable and population is less dense. The facts show solar power kills more people than nuclear ever has per TWH of energy generated, so you can dislike nuclear if you want, but just acknowledge that your viewpoint is not based on evidence, but emotion.

It's ridiculous to ask how many resources the financial system uses today, but totally reasonable to do so for BTC? Again are we arguing using facts or emotions here? If it's a debate of emotion, count me out, sounds like a waste of time. Lets talk numbers or not at all. You can adjust per market cap, of course. I am not saying that you shouldn't, but you can't do that until you know both figures.

I believe 100% that colonizing Mars is necessary and believe in SpaceX's mission. However, if you scream and cry about how much Elon is polluting for doing a single BTC transaction, yet cheer when rockets lift off, perhaps question that. Again looking at the numbers of CO2 generated, one Falcon Heavy launch is a heck of a lot more than a BTC transaction. Your statement that BTC serves no purpose is clearly incorrect. BTC is a great value store to protect your assets from inflation as governments print money to essentially steal your life savings unnoticeably. Tesla's crypto investment is a hedge against the current money printing going on. As someone from Germany, you should understand better than anyone how exactly money printing can destroy savings very rapidly.

That $1.5 billion stored in BTC could give Tesla a huge edge if inflation increases post-covid. Almost every economist is saying inflation will get worse in the near future, and that just makes sense. Most of the G20 are busy trying to print their way out of this problem to fund stimulus packages. My country (Canada) has been one of the worst offenders in this case. Hence why I moved more of my portfolio to BTC last year. If you were living in the Weimar Republic when the money printing started, and you had the option to either keep your assets in Marks or move them into BTC, what would you have chosen? Would you leave $1.5 billion in Marks in the name of reducing CO2 emissions? Looking back it would be an easy choice and many Germans did try to secure their money in foreign currencies. However, with a global pandemic, that won't work as well, so we need modern solutions.

There is a good saying "those who don't learn from history are doomed to repeat it".

 

[CertLive]

Hmmm I suppose I always though that the EV’s would offset the rockets co2 production. But bitcoin is a much larger scale use of energy. The point you are missing here is its yet another path that adds to large energy use and if its not green then you cancel out the gains of ev cars. From a financial point it makes all the sense in betting on a future currency. But its just not something I would have expected an electric car company built on cleaning up humanities transportation to be connected with in its scramble to burn more fossil fuel state. 50 years from now with green energy storage and fusion power BTC might be able to use whatever it likes. But what is 50 years going to do to the environment until then? Again the history doomed to repeat. Maybe a way to offset this investment Co2 wise would be an excellent gesture of good faith.

 

[AdamMacDon]

Hmmm I suppose I always though that the EV’s would offset the rockets co2 production. But bitcoin is a much larger scale use of energy. The point you are missing here is its yet another path that adds to large energy use and if its not green then you cancel out the gains of ev cars. From a financial point it makes all the sense in betting on a future currency. But its just not something I would have expected an electric car company built on cleaning up humanities transportation to be connected with in its scramble to burn more fossil fuel state. 50 years from now with green energy storage and fusion power BTC might be able to use whatever it likes. But what is 50 years going to do to the environment until then? Again the history doomed to repeat. Maybe a way to offset this investment Co2 wise would be an excellent gesture of good faith.

But let's be realistic here and assume that Elon is not Satoshi, BTC would exist regardless of what Tesla does. Is one transaction that bad for the environment? I'm a big numbers guy, so I looked at my wallet and saw that one BTC transaction is now an insane $92.44 CAD (about $70 USD). Usually it's like $5 on a bad day, but supply and demand are a pain. Let's do some grossly over simplified numbers.

So assuming that every single cent of that went into power and the miners get zero profit margin AND they have no capital costs they can afford $70 US of electricity. Let's say it's really cheap, dirty coal power in China at $0.05 USD per kWh. That means at most it consumes about 1400kWh per the transaction. That is a ton of energy, and let's say he has to sell it so two transactions at about 2.5 MWh. Pretty big numbers here but let's get some perspective, shall we. Like I said to our German friend, big numbers with no perspective are useless.

To make an average ICE car it uses about 260 gallons of gasoline worth of energy. (Source: Ask Mr. Green: How Much Energy to Make a New Car?) A gallon contains about 33kW. EVs actually take more energy to manufacture, but I want this to be as anti-BTC as possible. 8.5MWh to make one car. If Elon wants to offset his carbon footprint from the two transactions in this hypothetical worst case scenario he can just make one less Tesla and still be way carbon positive.

However I would posit that both making less cars and avoiding BTC to appear green would be a bad idea as a CEO. Advancing the transition to sustainable energy is the mission, NOT virtue signaling and acting eco friendly. That $1.5 billion in BTC will very likely go on to further the mission far more than would be possible if it was left in cash to be manipulated by the Grunch. If you really want to act eco friendly and ignore numbers, I recommend the recycling business, which is a prime example of virtue signalling and accomplishing little.

 

[Just a Reader]

Actually, per capita more bitcoins are mined in Iceland than anywhere else.

Bitcoin/capita. Oh, in Iceland - what a convenient way to look at it when you are looking at a country with a population that doesn't even amount to a Beijing suburb.
However, most Bitcoin are being mined in China. Iceland is very much the odd man out when you look at other hubs of Bitcoin production.
Anyway, your whole argument boils down to "if it's prudent from a financial point of view, then it's fine and it doesn't matter much in the great scheme of things". A perfectly reasonable view to hold, just don't claim that you are somehow driven by the desire to save the planet.

 

[AdamMacDon]

Bitcoin/capita. Oh, in Iceland - what a convenient way to look at it when you are looking at a country with a population that doesn't even amount to a Beijing suburb.
However, most Bitcoin are being mined in China. Iceland is very much the odd man out when you look at other hubs of Bitcoin production.
Anyway, your whole argument boils down to "if it's prudent from a financial point of view, then it's fine and it doesn't matter much in the great scheme of things". A perfectly reasonable view to hold, just don't claim that you are somehow driven by the desire to save the planet.

If you ignore per capita adjustments, then almost everything is overwhelming made in China, including the devices we are typing on now. Western countries have been outsourcing their dirty work to China for decades, so acting like it's surprising that BTC is doing the same seems silly. Polluting production of our electronic toys is fine, but BTC mining is a step too far?

You misunderstand my argument. It's not that the health of the planet doesn't matter, but to make a difference long term there are sacrifices to be made. A wise financial choice could be the difference between Tesla weathering a storm in the future, or going bankrupt. If they went bankrupt, it would be a massive blow to the transition to EV's and would likely slow the current momentum we have seen significantly.

However, the reality is if we TRULY want to reduce carbon emissions significantly, going electric is just the start, we also need robo taxis to work so we can get rid of the paradigm of every family having one or two cars (which is very wasteful of the earth's resources). Instead, we need a world where a fleet of 10 EV's can service 30-50 families. If you break it down to the physics, the building and maintaining of a car is a massive source of carbon emissions. If everyone has their own car like right now, it's very wasteful.

Tesla is the only company "crazy" enough to pursue this mission seriously. Uber can talk a big game about it, but considering they have shipped zero vehicles to consumers to date, color me skeptical about that. Making an app is a whole different ballgame compared to building cars. This is a magnitude more complex and requires extremely long term thinking financially to execute.

 

[ItsNotAboutTheMoney]

If you ignore per capita adjustments, then almost everything is overwhelming made in China, including the devices we are typing on now. Western countries have been outsourcing their dirty work to China for decades, so acting like it's surprising that BTC is doing the same seems silly. Polluting production of our electronic toys is fine, but BTC mining is a step too far?

You misunderstand my argument. It's not that the health of the planet doesn't matter, but to make a difference long term there are sacrifices to be made. A wise financial choice could be the difference between Tesla weathering a storm in the future, or going bankrupt. If they went bankrupt, it would be a massive blow to the transition to EV's and would likely slow the current momentum we have seen significantly.

However, the reality is if we TRULY want to reduce carbon emissions significantly, going electric is just the start, we also need robo taxis to work so we can get rid of the paradigm of every family having one or two cars (which is very wasteful of the earth's resources). Instead, we need a world where a fleet of 10 EV's can service 30-50 families. If you break it down to the physics, the building and maintaining of a car is a massive source of carbon emissions. If everyone has their own car like right now, it's very wasteful.

Tesla is the only company "crazy" enough to pursue this mission seriously. Uber can talk a big game about it, but considering they have shipped zero vehicles to consumers to date, color me skeptical about that. Making an app is a whole different ballgame compared to building cars. This is a magnitude more complex and requires extremely long term thinking financially to execute.

For gasoline vehicles, use typically accounts for about 80% of the energy, construction and disposal is 20%.
Even if autonomous taxis become cheap, if they're guzzlers, it'll help a lot with the use of other resources, but not so much energy or the resources that feed into the energy supply. In part that's because taxis add miles between customers.

Shift to much more efficient, high-mileage automonous ZEVs and that's a _huge_ impact in comparison.

 

[AdamMacDon]

For gasoline vehicles, use typically accounts for about 80% of the energy, construction and disposal is 20%.
Even if autonomous taxis become cheap, if they're guzzlers, it'll help a lot with the use of other resources, but not so much energy or the resources that feed into the energy supply. In part that's because taxis add miles between customers.

Shift to much more efficient, high-mileage automonous ZEVs and that's a _huge_ impact in comparison.

Both parts of the puzzle are important, although I agree it was smart to focus on the electric shift first. As well as shifting to carbon neutral energy sources to power our EVs. Of course a coal power-plant powered EV is still more efficient than a typical gas car, so again, this is lower priority.

The biggest problem with single family ownership of cars is the utilization rate is only around 5% (source: "Cars are parked 95% of the time". Let's check!) and there is a finite lifespan for a car (like any machine). In North America, a vehicle is lucky to see 20 years before hitting the scrap yard. Autonomy should significantly reduce the world car fleet size (I doubt by 20x, but even 5-7x would be a HUGE difference) and also reduce the amount of vehicles hitting the scrapyard prematurely because of a collision.

 

[Mattski30]

↑
"Funny how Tesla’s mission statement is “to accelerate the world's transition to sustainable energy” yet they invest in the most unnecessarily energy-consuming cryptocurrency."

Very true. There have been lots of articles about this worldwide. The higher the price of BTC, the more unsustainable electrical energy the network uses. Tesla's BTC purchase helped push the price up which makes mining with fossil fuels more profitable which encourages more FF mining which in turn leads to harder puzzles to solve. BTC was ingenious, but needs to fix the problem of higher price = more energy used (up by a factor of something like 70 TRILLION since inception according to some reports)

Hopefully, Musk is playing a long game of raising awareness of a problem before switching to a crypto that is faster, cheaper to transact in AND in line with Tesla's stated mission.

 

[Cleo-n-Company]

Can you imagine how far a 1.5 billion investment would help cure Tesla's service woes, as opposed to Elon's latest ADD / ADHD obsession (Bitcoin).

The mobile ranger program worked quite well - thank you very much. Since the company doesn't want to keep up with new SC's - how do you take care of those stupid, annoying, demanding customers ? I hate it when they want a proper functioning vehicle.

Some simple stupid math - in my estimation:

50K to hire + train a new mobile tech

Full-time employee 60K salary + benefits = about 90K a year

Put the rangers in an off-lease Tesla - just for argument's sake - between maintaining these vehicles and Tesla shouldering the continuing depreciation - vehicle cost 15K per year.

Again - simple stupid math - but 1st year costs to get 5,000 of these people up and running:

50 + 90 + 15 = 155K each (155,000) * (5,000) = 775M

So for about half the cost of one stupid coin toss into the Bitcoin well - Tesla could be well on its way to getting its service organization back into gear.

But nope - 2 weeks ago Bitcoin... this week Dogecoin... this is the future.

 

[Alset Srotom]

The coin is going to be mined whether Tesla purchases any or not.

Just FYI, Tesla purchased 1.5b at around $37,000, meaning that as of now that 1.5b is worth almost 1.9b. I'd say a 300m+ return will do a lot to help Tesla make the future sustainable.

Update:
As of time of writing, the initial 1.5b is now worth nearly 2.1b and is expected to be worth over 4b by Q4 2021.

 

[AdamMacDon]

Update:
As of time of writing, the initial 1.5b is now worth nearly 2.1b and is expected to be worth over 4b by Q4 2021.

Who could have seen that coming, shouldn't it have gone to zero by now?

 

[daniel]

I just heard about this and came here and found this thread.

This is absolute insanity! Bitcoin is nothing but a vehicle for speculation. Its price fluctuates so wildly that it's useless as a real currency (except on the dark web and the black market where the need to avoid the police outweighs all other concerns). If you want to speculate with your own money, that's fine. But you don't speculate with other people's money, and that's what Musk has done when he decided to speculate with Tesla's assets, which belong to all of us stockholders.

Bitcoin has no use-value. It does not produce anything, and unlike real currency which can be invested in companies or lent at interest, bitcoin is nothing. 0.1% of it is used for crime and 99.9% of it is held for pure speculation.

I'm not going to join any class-action lawsuits or anything, but I regard Musk's use of Tesla to speculate on bitcoin to the tune of a billion and a half dollars as malfeasance. I get it that some people believe that bitcoin will continue to go up forever, but speculate with your own money, not mine. That billion and a half dollars should be used to create new technology or to build the company's production capacity, or even to pay dividends. How about using it to hire more engineers to work on FSD? Or using it on quality control? Or, maybe better yet, how about using that billion and a half dollars to bring Tesla's customer service back up to the level it was when I first bought my Roadster? I read horror stories here on TMC about poor customer support.

Put that money into FSD research or customer support, not into wild speculation!

 

[Cleo-n-Company]

I just heard about this and came here and found this thread.

This is absolute insanity! Bitcoin is nothing but a vehicle for speculation. Its price fluctuates so wildly that it's useless as a real currency (except on the dark web and the black market where the need to avoid the police outweighs all other concerns). If you want to speculate with your own money, that's fine. But you don't speculate with other people's money, and that's what Musk has done when he decided to speculate with Tesla's assets, which belong to all of us stockholders.

Bitcoin has no use-value. It does not produce anything, and unlike real currency which can be invested in companies or lent at interest, bitcoin is nothing. 0.1% of it is used for crime and 99.9% of it is held for pure speculation.

I'm not going to join any class-action lawsuits or anything, but I regard Musk's use of Tesla to speculate on bitcoin to the tune of a billion and a half dollars as malfeasance. I get it that some people believe that bitcoin will continue to go up forever, but speculate with your own money, not mine. That billion and a half dollars should be used to create new technology or to build the company's production capacity, or even to pay dividends. How about using it to hire more engineers to work on FSD? Or using it on quality control? Or, maybe better yet, how about using that billion and a half dollars to bring Tesla's customer service back up to the level it was when I first bought my Roadster? I read horror stories here on TMC about poor customer support.

Put that money into FSD research or customer support, not into wild speculation!

So glad to see another voice of reason out there.

Elon is making it very hard for anyone to come up with Tesla satire. Between Bitcoin - Dogecoin - Hovering Roadsters - Programmed Fart Noises - Yoke Wheels... he's taking all of my strong material.

 

[Alset Srotom]

Update:
As of time of writing, the initial 1.5b is now worth nearly 2.1b and is expected to be worth over 4b by Q4 2021.

Update:
As of time of writing, initial 1.5b is now worth 2.2b.

 

[AdamMacDon]

Update:
As of time of writing, initial 1.5b is now worth 2.2b.

If only we had listened to the voice of reason, Tesla could have lost tens of millions to inflation instead as the fed ramps up the money supply. Damn it!

 

[Cleo-n-Company]

Update:
As of time of writing, initial 1.5b is now worth 2.2b.

Damn it !

Elon should have bought Bitcoin a year ago when it was at $4,000.

He could have then stopped building cars and opened a hedge fund.

Utter silliness.

And I really do need to ask the Bitcoin fanboys - what happens on the day when a customer buys their Tesla with Bitcoin and the currency goes down 5% before Tesla can convert it to an actual dollar ?

What if Tesla decides not to convert the Bitcoins for a month and it keeps sliding ?

Please don't tell me Bitcoin could also go up. Of course it can. But that's not the point.

It's a wild gamble. And if it was such a sure thing, why didn't Elon spend his own fortune on Bitcoin instead of spending shareholder dollars? Oh yeah - it's quite painless to gamble with other people's money.