Elon Musk, the brain behind Tesla, occasionally pops up in cryptocurrency news and scandals. From allegations of price manipulation to openly advocating for several cryptocurrencies, Musk has been a major player in the crypto space. Tesla and Bitcoin have had a unique relationship since the beginning.
So, it only makes sense for him to invest in crypto. That’s why Tesla’s investments in any crypto, such as Bitcoin and Dogecoin, are a topic of interest for crypto enthusiasts and investors alike.
What started as the company investing over a billion dollars in the currency and planning to accept it as a payment method has now resulted in the company selling most of its crypto holdings.
Below, we look at the Tesla-Bitcoin relationship and tell you whether it’s possible to buy a car using cryptocurrency from Tesla or any other company.
History of Tesla
Starting as a Silicon Valley startup, Tesla has become an EV powerhouse with a strong brand presence. Although widely successful now, the company hasn’t always been setback-free. Here’s a timeline of Tesla’s profession throughout the years.
A group of Silicon Valley engineers got together to found Tesla Motors. Although the company is now associated with Elon Musk, this wasn’t always the case. Marc Tarpenning and Martin Eberhard started the company, naming it after Nikola Tesla, the famous physicist known for his work in alternative energy sources.
Elon Musk, along with Ian Wright and JB Straubel, joined the company as co-founders later on. Eberhard was the company’s CEO and remained in the position until 2007.
Elon Musk became an important part of the company by leading its Series A funding round. In doing so, he became the chairman of the company’s board and contributed $6.5 million.
In 2006, Elon Musk told the world about Tesla’s long-term plan in a blog post. He revealed Tesla’s mission was to move toward clean energy, helping the transition from fossil fuels to alternative energy sources.
Tesla introduced the Roadster, its first electric car. The car was a high-end model that began production in March 2008 and was priced at $109,000. The same year, Musk became Tesla’s CEO.
Tesla went public in 2010, offering a $17 per share price for its 13.3 million shares. The share value closed at $23.89, bringing the company’s valuation to $2.2 billion.
In these five years, Tesla introduced Model S in 2012 and started building a new factory in Sparks, Nevada, in 2014. In 2015, the Model X SUV entered the market and wowed the world of luxury cars. Autopilot also became available to customers the same year.
Elon Musk revealed more of his company’s plans. The plan included the development of solar roofs, the creation of affordable vehicles, the advancement of self-driving technology, and a vision for the robotaxi service, which would allow Tesla owners to rent their cars.
Tesla got into the solar business the same year and dropped ‘Motors’ from its name in 2017 to show that Tesla was selling more than just cars now.
The relationship between Tesla and Bitcoin started in 2021. Tesla announced that it purchased Bitcoin worth $1.5 billion in January. The company also said it planned to accept Bitcoin as a payment method.
The same year, Tesla became a trillion-dollar company, joining Microsoft, Amazon, Alphabet, and Apple’s ranks.
History of Bitcoin
Introduced to the world in 2009, Bitcoin is the first and most well-known cryptocurrency. It was created under the pseudonym of Satoshi Nakamoto. The source code for Bitcoin was released as open-source software in 2009, and since then, it has been adopted by many people and organizations.
The idea behind Bitcoin was to create a decentralized digital currency not controlled by any central authority. The first few years were choppy, with people reluctant to use it and even skeptical about the technology.
But as Bitcoin’s popularity began to grow, so did its value. By 2013, Bitcoin passed the $1,000 value mark and became the most recognizable unconventional wallet.
2014 – 2016
The coin’s popularity stalled, and its value fell below $1,000. The decline could be attributed to the bankruptcy of Mt. Gox, a crypto exchange.
Things started getting better for Bitcoin as it reached the $3,000 mark by June. The price increased to $6,000 in October and went up to $10,000 by November. Bitcoin finished the year strong at over $19,000.
Once again, Bitcoin suffered a downward spiral in 2018. The coin dropped to under $7,000, and most holders sold their currency.
Bitcoin saw its next boom as the pandemic began. The shutdowns and lockdowns led to a massive surge in Bitcoin prices, surpassing $20,000 in December 2020.
Elon Musk showed his support for Bitcoin, further driving the hype around the coin. By November 2021, the cryptocurrency’s price went up to $68,990.
However, Bitcoin’s hype did not last long, and the coin saw a sharp decline to $20,623 in October 2022. Bitcoin prices steadily increased in the early weeks of 2023, with the coin priced at $23,137 on the first day of February 2023. However, Bitcoin is not even close to its 2021 glory right now.
The Relationship Between Tesla and Bitcoin
Tesla and Bitcoin have a murky history, with the company initially investing a ton of money and then selling most of its shares. In 2021, when Tesla filed its annual 10-k with the SEC (U.S. Securities and Exchange Commission), the document revealed that the company had purchased $1.5 billion worth of Bitcoin.
Tesla was not the first company to do something like this. Just the previous year, Square purchased Bitcoin worth $50 million. In its filing, Tesla mentioned that the company might invest a portion of its cash in alternative reserve assets, such as gold exchange-traded funds and digital assets.
The news caused a 16% spike in Bitcoin’s price, raising it to $4,795. Tesla also said it had plans to accept Bitcoin as a form of payment for its products once again.
Tesla had stopped accepting Bitcoin as a payment method earlier, citing environmental concerns regarding Bitcoin’s energy-intensive mining process. In his tweet, Musk said cryptocurrency is a good idea with a promising future, but it comes at a cost to the environment.
He said that Tesla would begin accepting Bitcoin for transactions once the mining process transitions to a sustainable energy source.
Tesla Sells Bitcoin
Although the company had promising plans for its Bitcoin adoption in 2021, the price decline caused Tesla to reevaluate its position. In the second quarter of 2022, Tesla sold 75% of its Bitcoin holdings, amounting to $936 million.
The decision came in the wake of Bitcoin’s valuation decline due to rising inflation fears. The company stated that the decision was made to ensure proper liquidity while keeping a portion of its cash in cryptocurrencies.
Tesla’s Bitcoin Holdings in Q3 of 2022
After trimming its Bitcoin position in the second quarter, Tesla made no changes to its holdings in the third quarter of 2022. There have been no reports of a sale or purchase of Bitcoin in the company’s latest earnings report.
How Much Bitcoin Does Tesla Have in 2023?
When Tesla bought Bitcoin in 2021, the coin’s price was $34,700. The purchase was made in February, after which Tesla sold 10% of its holdings in March of the same year.
But the big move came in July 2022 when Tesla sold 75% of its Bitcoin. At this time, 1 Bitcoin was worth $23,000, so Tesla’s sale was at a loss. After that, Tesla did not sell any more of its coins.
At the beginning of 2023, Tesla had 9,720 BTC. The value of these coins keeps dwindling as Bitcoin is a highly volatile asset. It is difficult to predict the exact value of its holdings in 2023, but it is speculated that the prices will fall.
Standard Chartered, a global bank, predicts the price to be as low as $5,000 in 2023. Meanwhile, other experts forecast the price to stay in the $10,000 range. But there are some positive views too.
The CoinShares chief strategy officer Meltem Demirors says that Bitcoin could trade at $25,000 to $30,000 on the higher end and $15,000 to $20,000 on the lower end in 2023. The market conditions and regulatory landscape can play a crucial role in influencing the value of Tesla’s holdings.
Does Tesla Accept Bitcoin As a Payment Method?
No, Tesla does not accept Bitcoin for payments anymore. Dogecoin is the only cryptocurrency the company accepts.
The transaction works just like a regular credit card payment. The buyer checks out from the car’s online ordering system, selects Dogecoin as their payment method, and completes the transaction.
Can You Buy a Car Using Cryptocurrency?
While Tesla may not accept Bitcoin as a payment method, it still accepts Dogecoin. So, that’s one way to purchase a car with cryptocurrency.
In general, you can buy cars using cryptocurrency in two ways: directly through a dealer that accepts crypto payments or through a peer-to-peer marketplace.
Dealers Accepting Cryptocurrency
Some dealerships accept cryptocurrency for transactions through payment processors like Coinbase and BitPay. Here are some of them:
- Jeff Wyler Automotive Family in Ohio, Kentucky, and Indiana
- Carriage Auto Group in Georgia and Alabama (payments through Coinbase)
- Bob Moore Auto Group, Oklahoma (accepts Litecoin, Ethereum, and Bitcoin only)
- Reed Jeep Chrysler Dodge Ram in Merriam, Kansas
- Porsche Towson in Towson, Maryland
- BMW of Rockville in Rockville, Maryland
- Edmark Toyota in Nampa, Idaho (accepts Bitcoin, Ripple, NEO, IOTA, Cardano, Bitcoin Cash, Ethereum, Litecoin, and USDC)
- Lamborghini Newport Beach Irvine, California
Paying Using Crypto Debit Cards
A crypto debit card is another way to buy a car with cryptocurrency. These cards work similarly to regular debit cards. They’re linked to your crypto wallet and allow you to pay using cryptocurrencies.
For example, the Coinbase Visa and BitPay Mastercard allow you to withdraw funds from your crypto wallet and convert them into US dollars to pay for a car. These cards work at any place that accepts a debit card. Some examples include the Vegas Auto Gallery and RM Sotheby’s.
However, it may be difficult to find a dealer that lets you buy a car using a debit card. But if the dealer is on board, you can use the crypto debit card for down payments, monthly payments, or complete purchases.
Online Auction Sites
Another way to buy a car using cryptocurrency is to use the Car for Coin auction site. The platform shows the cars’ prices in USD and BTC. You can make an offer and pay for it through a cryptocurrency wallet.