Bitcoin growing popularity and use shows no signs of slowing down. If there was any doubt that the flagship cryptocurrency will ever find its way into the mainstream sector, then Tesla Inc. (NASDAQ:TSLA) might as well have cast them out. A confirmation that the EV giant will start accepting Bitcoin payments for its cars affirms its growing use in the mainstream financial sector.
Tesla Bitcoin Payments
As has come to be the case in recent months, Tesla founder Elon Musk once again took the crypto markets by storm with the confirmation. The confirmation comes hot on the tech giant’s heels makes a $1.5 billion investment in the high flying cryptocurrency.
Bitcoin payments on Tesla cars will only apply to US drivers. However, the company has confirmed it is working on making the option available to other countries. In addition, the bitcoin payments will be processed via the company’s internal Bitcoin nodes using open-source software.
Tesla does not intend to sell any bitcoins it receives as electric car payments. Instead, the company plans to stack them, having become one of the biggest investors in cryptocurrency. Holding on to the cryptocurrency affirms its growing belief that its price will continue edging higher after topping record highs of $60,000 in recent days.
Tesla accepting and stacking bitcoin payments cement the acceptance of the flagship cryptocurrency as a viable currency. It joins several companies and entities that are also accepting bitcoin payments, all but influencing its mainstream adoption.
The price of Bitcoin edging higher should see the value of bitcoin payments accepted edging higher, which is why most companies are increasingly adding support. However, there is also a significant risk given that the cryptocurrency is extremely volatile and can tank by up to 20% at any given time.
More companies joining Tesla in accepting Bitcoin payments and holding the coins rather than converting them into dollars should build momentum around the digital currency. Such a move should cement the notion that the crypto asset is here to stay and that its value can only continue to edge higher.
Bitcoin Tax Bill
However, there is growing concerns that Tesla purchased with Bitcoin could come with big tax bills for the EV giant. The US Internal Revenue Authority treats cryptocurrencies as property for federal tax purposes. Likewise, it is widely expected that capital gains taxes will apply on all bitcoin payments for Tesla cars.
Tesla absorbing Bitcoin payments and failing to convert them into dollars could make it difficult to calculate capital gains tax. Bitcoin constantly changing price could see taxpayers reporting gains and losses while using it to make purchases.
Fidelity Bitcoin ETF
Amid the growing Bitcoin payment use cases, investment funds are also looking to profit from its meteoric price rise. Asset management firm Fidelity is the latest to affirm plans to launch a Bitcoin exchange-traded fund.
The Wise Origin Bitcoin ETF is the latest addition that will utilize Fidelity’s in-house BTC price index. The ETF is to track the digital currency’s performance as measured by the performance of the Fidelity Bitcoin Index PR. Similarly, investors should be able to access the market of Bitcoin through a traditional brokerage account.