Tesla – a top 10 Fortune 100 company run by one of the world’s richest people, Elon Musk – transferred $ 1.5 billion of its cash to Bitcoin (BTC) in early February. Musk’s purchase of Bitcoin scared traditional investors, who now needed to understand how their investment in Tesla would compare to Bitcoin.
Currently, much of Tesla’s revenue comes from the sale of excess renewable energy credits, or RECs, which will dry up in the coming years as competing automakers produce their own zero-emission vehicles and build RECs with states that need them.
In Tesla’s filing with the United States Securities and Exchange Commission, the company stated that it had updated its investment policy to be more flexible in diversifying and maximizing returns on idle money. As part of this plan, Tesla said it would invest in certain “ alternative reserves, including digital assets, gold bullion, [and] exchange traded gold funds. The statement continues:
“After that, we invested a total of $ 1.50 billion in Bitcoin under this policy and can acquire and hold digital assets from time to time or in the long term. In addition, we expect to accept Bitcoin as a form of payment for our products in the near future, subject to applicable law and initially on a limited basis, which we may or may not liquidate upon receipt. “
The Bitcoin market has seen Tesla’s recognition and advancement in the crypto industry as institutional validation for Bitcoin’s use as a store of value.
Related: Tesla, Bitcoin and the crypto space: the show Musk continues? Experts answer
Using decentralized micro energy resources for Bitcoin mining
Tesla’s other companies manufacture and sell solar panels, solar roofs and batteries. The batteries are used in his cars and provide energy storage for residential solar systems.
Residential solar systems can supply surplus energy to the grid. The local power company will prorate a customer’s electricity bill based on the amount of power drawn from the system.
Tesla Powerwalls can store that excess energy and power various things in your home, including air conditioners, and charge your Tesla electric car.
The excess energy from Tesla’s micro-energy resources can be diverted to conduct crypto mining operations. Without crypto mining, the excess energy is either wasted or stored and sold for cents of the dollar. Now Tesla and other energy companies can convert excess power into a digital asset, such as Bitcoin, that is instantly affordable.
Related: From Mother’s House to Warehouse: Bitcoin mining is getting industrial
How SpaceX fits in
Many speculate that Tesla’s investment in and acceptance of Bitcoin as payment is an important signal of the company’s direction. As we know, Musk is also the CEO of SpaceX, the company that aims to set up a colony on Mars for the next decade. However, US dollars don’t fundamentally work on Mars. The longer communication time between Earth servers and Mars servers presents many problems. There will still need to be a verifiable, reliable way to transfer value between the economies of the planets.
Bitcoin offers a better solution for securely transferring value between planets on a trusted network where the 10 minute block times are ultimately beneficial rather than hassle. SpaceX’s colony can trade locally using a convenient local medium of exchange and safely transfer that value to Earth without middlemen or concerns about inflationary monetary policy on Earth. Bitcoin provides a more seamless way for people to integrate economies between planets. Therefore, colonies on Mars are likely to use Bitcoin nodes that make use of SpaceX’s Starlink satellite constellation.
Decentralized server architecture to create the internet of value
The transition from the analog world to a digital indigenous society requires programmable money. The current fiat banking system is archaic, inefficient and incapable of meeting the needs of a technologically advanced society.
Bitcoin mining is the backbone of this evolution. Bitcoin is the most recognized digital currency in the newly forming decentralized economy. Bitcoin has reached critical network impacts and is the natural choice for a digitally native global reserve currency. The Internet of Value – where value is transferred as efficiently, cheaply and reliably as data is today – is free from the control of any individual government or entity. Bitcoin serves this purpose because of the decentralized architecture built into the Bitcoin protocol.
Critics are attacking Bitcoin for housing too much of its processing power in mainland China. Meanwhile, the decentralization of Bitcoin’s computing power will continue to improve as more energy producers recognize the benefits of converting excess energy into digital assets through Bitcoin mining.
Related: Is Bitcoin a waste of energy? Pros and Cons of Bitcoin Mining
Bitcoin mining is necessary to establish layer one security for the decentralized economy, a feature that central banks now provide for the fiat-centric global economy. The decentralized economy is becoming more efficient and layered. The strength of Bitcoin is that it has the world’s most powerful computer network to secure the base layer of the decentralized economy, on which all other value transmission solutions are built. We are witnessing the development of a new decentralized financial ecosystem. One day you might be able to send maybe $ 20 to your friends on Mars without thinking twice about what it took to get it there.
This article does not contain investment advice or recommendations. Every investment and trade move carries risks, and readers should do their own research when making a decision.
The views, thoughts and opinions expressed here are solely of the author and do not necessarily reflect or represent the views and opinions of Cointelegraph.
William Szamosszegi is the CEO and founder of Sazmining Inc, a cryptocurrency mining developer and consultancy, and host of Everything Crypto Mining: The Sazmining Podcast. He is optimistic about Bitcoin’s future as the dominant global digital reserve asset and believes Bitcoin is the solution for layer one, healthy money. William grew up in Maryland and studied psychology and management at Bucknell University. William spends his free time playing sports, seeing friends and reading.