- The automaker last month revealed that it had bought $1.5 billion worth of bitcoin.
- People outside the U.S. will be able to buy a Tesla with bitcoin “later this year.”
- In order to accept the payment, Elon Musk said Tesla is using “internal” and “open source software.”
Tesla CEO Elon Musk announced late Tuesday that it is now possible to buy Tesla vehicles in the U.S. with bitcoin.
The automaker last month revealed that it had bought $1.5 billion worth of bitcoin and that it would soon start accepting the world’s most popular cryptocurrency as a form of payment.
“You can now buy a Tesla with Bitcoin,” tweeted Musk, who was officially made the “Technoking of Tesla” this month.
A support page on Tesla’s website explains how customers can pay for a Tesla using the digital currency. The company’s electric vehicles typically cost between $37,990 and $124,000 before tax.
People outside the U.S. will be able to buy a Tesla with bitcoin “later this year,” Musk said, without specifying which countries.
In order to accept the payment, Musk said Tesla is using “internal” and “open source software.”
He added that Tesla “operates bitcoin nodes directly.” Nodes are computers on bitcoin’s network that work to verify transactions and avoid the cryptocurrency from being spent twice.
In the firm’s refund policy, Tesla cautioned buyers that should they seek to return their electric car and obtain a refund, the company can choose to pay them back in U.S. dollars or bitcoin. Tesla notes that it reserves the right to refund the customer in U.S. dollars at the exact price bitcoin was worth at the time of purchase.
This would ostensibly allow Tesla to benefit from price swings in the cryptocurrency or fiat currency, and leave customers with less than what they may have been entitled to with a refund based on a straight U.S. dollar transaction.
Daniel Ives, an analyst at Wedbush, said in a research note Wednesday that his firm wasn’t expecting Tesla to start accepting bitcoin payments until the second half of this year.
“This is a seminal moment for Tesla and for the crypto world with Musk now cutting the red ribbon on Bitcoin transactions within he broader Tesla ecosystem,” said Ives. “We expect less than 5% of transactions to be through bitcoin over the next 12 to 18 months however this could move higher over time as crypto acceptance starts to ramp over the coming years.”
Musk embraces bitcoin
Tesla’s image as an environmentally-friendly car company sits at odds with the bitcoin network’s colossal carbon footprint. Researchers at the University of Cambridge found that it uses more electricity on an annual basis than the whole of Argentina. A 2018 paper published in Nature, arguably the most prestigious academic journal in the world, found that bitcoin emissions alone could push global warming above 2 degrees Celsius.
Despite its poor environmental credentials, Musk has embraced bitcoin more than any other major tech CEO. He has been tweeting about the cryptocurrency on and off over the last few months, raising alarm bells in some corners. He’s also been tweeting about other coins like ether and dogecoin.
Ives told CNBC last month that Tesla’s share price is now directly tied to the value of bitcoin.
“Musk is now tied to the bitcoin story in the eyes of the Street and although Tesla made a billion paper profit in its first month owning the digital gold, it comes with added risk,” Ives told CNBC via email.
Tesla’s share price and the value of bitcoin have seen huge gains over the last 12 months, with Tesla shares rising from around $100 to over $600, and bitcoin rising from around $7,000 to over $55,000.
Some investors, however, are convinced that Tesla and bitcoin are both in bubble territory.
Lansdowne Partners fund manager Per Lekander told CNBC last week that he thinks Tesla is in a bubble and that he’s short on Musk’s firm, meaning he will profit if the value of Tesla’s stock falls.
Tesla’s market value soared to over $800 billion in the 12 months leading up to January, before dropping to less than $600 billion in February. It now stands at around $635 billion.
Tesla’s shares were up around 0.6% in after hours trading Tuesday, after closing at $662.16. The price of bitcoin is at $55,444.93.
