Bitcoin take-up prompts investor debate

While Tesla’s move to add $1.5 billion worth of bitcoins to its books reflects a vote of confidence for cryptocurrencies in general, it has also led to questions by some investors over the value they place on these assets.

Few asset classes are as intriguing as cryptocurrencies. So, when Tesla disclosed it had invested $1.5 billion worth of reserves into bitcoins in early February, the digital currency surged.

Tesla’s allocation is only 10% of the $19 billion cash it held as of the end of 2020. However, outside the numbers, the commitment signals a meaningful shift in tone. The announcement that the group would consider accepting bitcoins as payment for its electric vehicles has led to a much sharper focus among investors on what this might mean in terms of their appetite for cryptocurrencies going forward.

Since they are not backed by any central bank, these...

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