Elon Musk and his companies, Tesla and SpaceX are at the forefront of the cryptocurrency adoption trend. Currently, when only a handful of publicly traded companies even mention cryptocurrencies, both Tesla and SpaceX have converted a portion of their cash holdings into bitcoin.
Tesla’s first foray into the cryptocurrency world happened back in 2021 when the EV maker announced that it has acquired $1.5 billion worth of Bitcoin.
For a short time, the EV maker also allowed the purchase of the company’s vehicles using Bitcoin. Although soon after, Tesla stopped accepting Bitcoin citing the cryptocurrency's high energy use and the fact that a large portion of Bitcoin miners use coal energy to power their rigs.
Instead of Bitcoin, Tesla and SpaceX shifted to the meme currency Dogecoin. Currently, anyone looking to buy an item from Tesla’s merch store has the choice to pay using Dogecoin.
Not only that, but Musk on his own has also been one of the biggest supporters of Dogecoin and is widely credited as the reason the value of the cryptocurrency has grown exponentially in such a short time frame.
And as cryptocurrencies, especially bitcoin and dogecoin increased in value, Musk and Tesla were celebrated for their foresight.
At the peak of the cryptocurrency market, the price of one Bitcoin reached $69,000. Tesla’s $1.5 billion investment had also appreciated to about $2.5 billion. This brought Tesla and Musk accolades from all corners of the financial world.
However, the celebration did not last for too long. Currently, Bitcoin and Dogecoin, together with the broader financial market are in a free fall. Far from its $69,000 high, now, one Bitcoin is trading at around $20,000.
And Dogecoin is doing even worse. The meme currency has fallen more than 80% from its high of 74 cents and currently is valued at around 6 cents.
It’s estimated Tesla acquired its Bitcoin around an average price of $34,000. And this means the EV maker’s Bitcoin holding is currently around $400 million in the red.
And as Tesla’s Bitcoin profit has turned to a loss and people that followed Elon Musk and bought Dogecoin have lost a significant chunk of their wealth, some have started to point their fingers at Musk and Tesla for their ordeal.
And today, at his appearance at the Qatar Economic Forum, Elon Musk was asked by the moderator “over the weekend you tweeted your support of one cryptocurrency [Dogecoin]. you have seen the kind of carnage that has been happening around cryptocurrencies at the moment. What is happening and do you think people should invest or is it a more selective approach?”
Musk first started out by saying “I have never said that people should invest in crypto. In the case of Tesla, SpaceX, and, myself…SpaceX and Tesla did buy some Bitcoin but it’s a small percentage of our total cash and you know cash assets. So not that all significant.”
Musk then continued “I also bought Dogecoin. And Tesla accepts Dogecoin for some merchandise and SpaceX will do so soon.”
This was all expected however, what was surprising was what Musk gave as the reason he supports Dogecoin. Musk said “and I intend to personally support Dogecoin because I just know a lot of people who aren’t that wealthy who, you know have encouraged me to buy Dogecoin and support Dogecoin. So I’m responding to those people. Just people when I walk around the factory at SpaceX and Tesla, they have asked me to support dogecoin so I’m doing so.”
Dogecoin was initially created as a way to make fun of cryptocurrencies and later found use as a form of tip for memes. And up until now, most people had thought this internet-first meme-centric underpinning of the cryptocurrency was the reason for Musk’s continued support of Dogecoin.
However, it’s interesting to learn that Dogecoin’s performance is also directly tied to the financial well-being of Musk’s employees.
Sadly, despite Elon Musk’s best efforts, Dogecoin’s value, at least currently, isn’t showing any signs of recovery. However, we will be sure to keep you posted if the situation changes. Until then, make sure to visit our site torquenews.com/Tesla regularly for the latest updates.
So what do you think? Surprised to learn the reason behind Elon Musk’s support for Dogecoin? Also, how do you think Dogecoin’s crash will affect morale at Tesla and SpaceX? Let me know your thoughts in the comments below.
For more information check out: Proposed $15,000 EV Tax Credit - Would Tesla Benefit?
Tinsae Aregay has been following Tesla and The evolution of the EV space on a daily basis for several years. He covers everything about Tesla from the cars to Elon Musk, the energy business, and autonomy. Follow Tinsae on Twitter at @TinsaeAregay for daily Tesla news.