SpaceX owner and Tesla CEO Elon Musk arrives on the red carpet for the Axel Springer media award, in Berlin. Tesla says it has invested more than $1 billion in Bitcoin and will accept the digital currency as payment for its electric vehicles. (Hannibal Hanschke/AP)

SpaceX owner and Tesla CEO Elon Musk arrives on the red carpet for the Axel Springer media award, in Berlin. Tesla says it has invested more than $1 billion in Bitcoin and will accept the digital currency as payment for its electric vehicles. (Hannibal Hanschke/AP)

Cost of a single Bitcoin exceeds $50,000 for first time

Price up almost 200% in the last 3 months, Tesla plans to buy $1.5-billion in the cryptocurrency

The seemingly unstoppable rise of Bitcoin continued Tuesday with the cost of a single unit of the digital currency rising above $50,000 for the first time.

The same Bitcoin just one year ago would have cost you $10,000. The price is up almost 200% in the last three months alone.

Bitcoin is rallying as more companies signal the volatile digital currency could eventually gain widespread acceptance as a means of payment. The vast majority of those who have acquired Bitcoin have treated it as a commodity, like gold, with few places accepting it in exchange for goods or services.

Companies have been leery because of Bitcoin’s volatility and its use by parties who want to avoid the traditional banking system for a myriad of reasons. On Tuesday, the price crossed and recrossed the $50,000 barrier at least a half dozen times before 10 a.m.

Last Monday, however, the electric car company Tesla sent a tremor through the digital currency markets, saying that it was buying $1.5 billion in Bitcoin as part of a new investment strategy, and that it would soon be accepting Bitcoin in exchange for its cars.

Then Blue Ridge Bank of Charlottesville, Virginia, said that it would become the first commercial bank to provide access to Bitcoin at its branches. The regional bank said Wednesday that cardholders can purchase and redeem Bitcoin at 19 of its ATMs.

BNY Mellon, the oldest bank in the U.S., followed a day later, saying it would include digital currencies in the services it provides to clients. Mastercard said it would start supporting “select cryptocurrencies” on its network.

While most expect a slow evolution toward widespread usage of bitcoins as currency, Richard Lyons, a finance professor at the University of California at Berkeley, says it’s inevitable. Lyons predicts Bitcoin and other digital currencies “will become transactional currencies increasingly over the next five years. It’s not going to happen overnight,” he said.

Lee Reiners, who teaches fintech and cryptocurrency courses at Duke University School of Law, said BNY Mellon’s move makes sense because “there are now numerous high-net-worth individuals and investment funds embracing crypto as an asset class to be added to their portfolio.”

READ MORE: In bid to win market share, Tim Hortons modernizing drive-thrus, upgrading menu items

But Reiners believes companies will remain hesitant to accept Bitcoin for payment because of its volatility.

“If you were a merchant, why would you accept payment in an asset that could be worth 20% less a day after you receive it?,” Reiners said in an email.

Investors will have to grapple with that volatility as well. The price of Bitcoin has soared and dipped since its debut on the futures market in 2017. A year ago, Bitcoin sold for below $10,000. Those fluctuations, analysts warn, could wreak havoc on a company’s bottom line and deter investors.

Assuming Tesla bought Bitcoin at the volume-weighted average price of $34,445 in January, the company is sitting on a gain of about 38% with its investment. But in the regulatory announcement unveiling the investment, Tesla warned about the volatility of Bitcoin, its reliance on technology for use and lack of a centralized issuer, such as a government.

“While we intend to take all reasonable measures to secure any digital assets, if such threats are realized or the measures or controls we create or implement to secure our digital assets fail, it could result in a partial or total misappropriation or loss of our digital assets, and our financial condition and operating results may be harmed,” Tesla said in the filing.

“Tesla is going to have to be very careful and comprehensive in accounting for its Bitcoin investment on its books,” said Anthony Michael Sabino, a professor of law, at St. John’s University. “Like any other financial asset other than actual cash, it might fluctuate.”

There appears to be some reluctance among traditional companies regarding Bitcoin, at least as an investment vehicle.

During a recent conference call with investors, General Motors CEO Mary Barra said her company had no plans to invest in Bitcoin, but would continue to “monitor and evaluate” potential use of digital currency.

“If there’s strong customer demand for it in the future, there’s nothing that precludes us from doing that,” Barra said.

Business

Get local stories you won't find anywhere else right to your inbox.
Sign up here

Just Posted

An artist’s rendering of the new fire hall and ambulance station for the Town of Creston, which announced the purchase of land on Jan. 14, 2020. (Photo: Town of Creston)
Town of Creston recommends increasing budget for emergency services building project from $5.4 million to $7 million

The town has cited rising construction costs exacerbated by the COVID-19 pandemic as a significant factor in driving the surge in the budget

A soldier walks along the outside of a crater formed through a demolition. Photo: Aaron Hemens
Military exercises assist with restoration of Lower Kootenay Band wetlands

A total of nine craters were created through demolitions, where the goal is to have them serve as future habitats for ducks and geese.

Al Garrecht holds up a plaque acknowledging his “service above self” from the Creston Valley Rotary Club during a tribute meeting on Feb. 9, 2021. Photo: Dave Handy
Creston Valley Rotary Club bids farewell to longtime member Al Garrecht

“Thank you, Al Garrecht. You leave an incredible legacy of service with CVRC. You live our motto, ‘Service Above Self’. Thank You.”

A dose of COVID-19 vaccine is prepared at a vaccination clinic in Montreal’s Olympic Stadium on Tuesday, Feb. 23, 2021. THE CANADIAN PRESS/Paul Chiasson
39 new cases of COVID-19 in Interior Health region

The total number of cases in the region since the pandemic began is now at 7,334

Kootenay-Columbia MP Rob Morrison speaks during Question Period in the House of Commons. File photo.
Kootenay-Columbia MP supports motion condemning Uighur genocide

Rob Morrison says labelling Uighur persecution as a genocide sends a message to Chinese government

Dr. Bonnie Henry leaves the podium after talking about the next steps in B.C.’s COVID-19 Immunization Plan during a press conference at Legislature in Victoria, B.C., on Friday, January 22, 2021. THE CANADIAN PRESS/Chad Hipolito
COVID: 589 new cases in B.C., and 7 new deaths

No new outbreaks being reported Feb. 26

Staff from the Marine Mammal Rescue Centre, passersby, RCMP and Nanaimo Fire Rescue carried a sick 300-kilogram steller sea lion up the steep bluff at Invermere Beach in north Nanaimo in an attempt to save the animal’s life Thursday. (Photo courtesy Marine Mammal Rescue Centre)
300-kilogram sea lion muscled up from B.C. beach in rescue attempt

Animal dies despite efforts of Nanaimo marine mammal rescue team, emergency personnel and bystanders

Gina Adams as she works on her latest piece titled ‘Undying Love’. (Submitted photo)
‘Toothless’ the kitty inspires B.C. wood carver to break out the chainsaw

Inspired by plight of a toothless cat, Gina Adams offers proceeds from her artwork to help animals

Cannabis bought in British Columbia (Ashley Wadhwani/Black Press Media)
Is it time to start thinking about greener ways to package cannabis?

Packaging suppliers are still figuring eco-friendly and affordable packaging options that fit the mandates of Cannabis Regulations

B.C. Finance Minister Selina Robinson presents bill to delay B.C.’s budget as late as April 30, and allow further spending before that, B.C. legislature, Dec. 8, 2020. (Hansard TV)
How big is B.C.’s COVID-19 deficit? We’ll find out April 20

More borrowing expected as pandemic enters second year

The first of 11 Dash 8 Q400 aircraft's have arrived in Abbotsford. Conair Group Inc. will soon transform them into firefighting airtankers. (Submitted)
Abbotsford’s Conair begins airtanker transformation

Aerial firefighting company creating Q400AT airtanker in advance of local forest fire season

Arrow Lakes Caribou Society said the new caribou pen near the Nakusp Hotsprings is close to completion. (Submitted)
Maternity caribou pen near Nakusp inches closer to fruition

While Nakusp recently approved the project’s lease, caribou captures are delayed due to COVID-19

The Canada Revenue Agency says there were 32 tax fraud convictions across the country between April 2019 and March 2020. (Pixabay)
Vancouver man sentenced to 29 months, fined $645K for tax evasion, forgery

Michael Sholz reportedly forged documents to support ineligible tax credits linked to homeownership

Then-Liberal leader Andrew Wilkinson looks on as MLA Shirley Bond answers questions during a press conference at Legislature in Victoria. (Chad Hipolito / THE CANADIAN PRESS)
B.C. Liberal party to choose next leader in February 2022

Candidates have until Nov. 30 to declare whether they are running

Most Read