[ad_1]
Published image, Getty Images
Tesla boss Elon Musk recently added the hashtag “bitcoin” to his Twitter profile page
Bitcoin hit record highs for a second day, after Elon Musk’s Tesla Motor Company said it bought around $ 1.5 billion worth of cryptocurrency.
Bitcoin’s value topped $ 48,000 before falling, but it is still almost 25% higher than a week ago.
Some investors have taken Tesla’s decision as an indication that Bitcoin will become a major financial asset.
However, there have been some criticisms of an eco-friendly automaker investing in such a fuel-intensive currency.
Bitcoin currently uses more energy than Argentina each year, according to a Cambridge University analysis.
The production of cryptocurrency, known as “bitcoin mining”, requires energy-hungry computers and ever-increasing processing power.
“Tesla: sells carbon credits to buy Bitcoin, which requires as much energy (not always green energy) as a small mining country,” said Mike Butcher, editor of TechCrunch.
What is Bitcoin and how does it work?
Bitcoin is a form of digital currency. This means that he has no physical form. Instead, units of digital currency are exchanged over a computer network.
It operates on a global network of thousands and thousands of nodes – a device within a network like a computer or another device – which together process and store transactions.
In an explanation of its investments on Monday, Tesla said it wants to maximize the cash returns inherent in the company’s accounts. It also plans to accept Bitcoin payments for its electric cars in the future.
Shares of companies providing trading platforms for Bitcoin mining and cryptocurrency technology have risen in China, South Korea and Australia, as have major computer chip makers such as SK Hynix.
The value of the cryptocurrency has already grown 62% this year, in addition to a 300% surge in 2020, as investors seek alternative assets at a time when interest rates in many countries are rising. at record levels.
Bitcoin has caught the attention of major investment firms, including BlackRock, which recently amended a batch of investment mandates to allow some of its money to be invested in the currency.
However, central banks remain skeptical of the cryptocurrency. in October/ In October, Bank of England Governor Andrew Bailey warned against using bitcoin as a form of payment, saying it lacked ‘intrinsic value’ unlike silver or gold .
Some institutional investors are also concerned about the price volatility of bitcoin.
“For people who believe in cryptocurrencies, (the Tesla investment) gives them another layer of support that cryptocurrency is the future,” said Robert Pavlik, senior portfolio manager at Dakota Wealth.
But questioning Bitcoin doesn’t mean central banks and regulators are against digital currencies per se.
And in China in particular, regulators have started to embrace issuing their own digital currencies for everyday use.
Source link
