Corporate tax commentators criticize Tesla’s boast of $ 1.5 billion in bitcoin and reflect outdated rhetoric about bitcoin fluctuations.
In a speech to the Financial Times, Jerry Klein, CEO of New York-based investment management firm Treasury Partners, said there is no need to pump the company’s money into bitcoin.
Citing another critic quoted by the Financial Times, Campbell Harvey of Duke University in Durham, North Carolina, he called Tesla’s acquisition of bitcoins “unusual” and “risky” and added that it would not serve as a hedge against market volatility.
Critics of Tesla’s Bitcoin purchase say the move could put shareholders at risk due to Bitcoin’s volatility. Some are citing historical events such as the 2018 bear market and the Black Thursday sale in March 2020.
However, these arguments seem to ignore the “trajectory of Bitcoin’s price without looking back” as not all crashes return to the price level prior to the previous record.
Bitcoin’s equivalent failure from the lowest level is not clear from these BTC counterarguments. For example, Black Black Crash in 2020 was followed by an eight-fold increase by the end of the year.
Business analytics company MicroStrategy has been buying bitcoins since August 2020 and has spent about $ 1.1 billion to buy 71,079 BTC. At today’s price, the company’s bitcoin shares are valued at $ 3.3 billion – that’s a 200% return on investment.
Bitcoin has been the top performer of the past decade, gaining nearly 9,000,000% and surpassing all other asset classes. In fact, at the time of writing, only Bitcoin has been bought above the $ 47,000 price level, which is currently unprofitable.
Speaking to CNBC, Michael Saylor, MicroStrategy CEO and Bitcoin Specialist, faced the rhetoric of volatility, stating that the holding of cash reserves resulted in a sustained loss of 75% of shareholder value over the past decade, while investments in BTC gave a volatile valuation. which doubles every six. months. … According to Sailor:
“Companies that convert their dollars into bitcoins take a passive asset (cash) and convert it into the most efficient asset. Bitcoin has been valued at about 230% year on year for a decade […] I would rather fluctuate in price by 230% annually, instead of regularly falling 15-20% annually. ”
Billions of dollars in stimulus packages from major economies are expected to put further pressure on paper currencies.
Aside from cutting Tesla’s investment in Bitcoin, these corporate tax experts said other companies would not follow in Tesla’s footsteps.
However, Tesla is only the latest in a growing group of publicly traded companies to maintain a Bitcoin balance. As Cointelegraph previously reported, 1,400 companies signed up for training camps to buy Bitcoins from MicroStrategy.
In fact, Apple Bull RBC Capital Markets recently urged the iPhone maker to follow Tesla’s lead in buying Bitcoin. RBC even asked Apple to continue building a bitcoin exchange.
The largest cryptocurrency by market value currently stands at nearly 60% YTD.