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

The Port Alice pulp mill has been dormant since 2015. (North Island Gazette file photo)
The Port Alice pulp mill site is being ‘recycled’

Bankruptcy company is overseeing de-risking the site, water treatment and environmental monitoring.

Port Hardy Senior Citizens’ Society president Rosaline Glynn holds up the certificate from B.C. Premier John Horgan next to Loaves & Fishes director Peter Sinclair, vice president Kris Huddlestan, and Port Hardy mayor Dennis Dugas. (Submitted photo)
Port Hardy council to nominate Glynn for the Order of British Columbia

Glynn’s nomination was endorsed unanimously by council.

Emergency personnel crews on scene assisting BCEHS with patient care. (Port Hardy Fire Rescue photo)
Speed and alcohol believed to be the cause of Saturday night car crash

More information on the crash could potentially be released at a later date.

Nootka Sound RCMP responded to a workplace fatality report south of Gold River on Monday morning. (Campbell River Mirror photo)
One dead in accident at Western Forest Product’s TFL 19 logging site in Gold River

The RCMP and Work Safe BC are investigating the incident

North Island Gazette file photo of Port Hardy council
Council discusses Highland Manor sale

Port Hardy council debates what approach to take to Highland Manor after sale.

Health Minister Adrian Dix looks on as Dr. Bonnie Henry pauses for a moment as she gives her daily media briefing regarding COVID-19 for British Columbia in Victoria, B.C. THE CANADIAN PRESS/Jonathan Hayward
7 additional deaths and 542 new COVID-19 cases in B.C.

Provincial health officials reported 18 new COVID-19 cases linked to variants of concern

Chelsea Harry was last seen Feb. 21. Photo via Comox Valley RCMP
Vancouver Island RCMP seeking help locating a missing woman

Missing person last seen in Courtenay on Feb. 21

Backcountry skiers are dwarfed by the mountains as they make their way along a mountain ridge near McGillivray Pass Lodge located in the southern Chilcotin Mountains of British Columbia, Tuesday, Jan. 10, 2012. Avalanche Canada has issued a special warning to people who use the backcountry in the mountains of western Alberta and eastern British Columbia. THE CANADIAN PRESS/Jonathan Hayward
Avalanche Canada special warning for mountains in western Alberta, eastern B.C.

Avalanche Canada also says everyone in a backcountry party needs essential rescue gear

A recently finished $4.3-million taxiway extension at the Victoria International Airport (not pictured) is unusable because of a blind spot. (Black Press Media file photo)
Blind spot leaves Victoria airport’s new $4.3-million taxiway extension unusable

Solution has been put on hold by COVID-19 pandemic, says airport authority

Chief Justice Christopher Hinkson (Office of the Chief Justice)
Judge questions whether B.C.’s top doctor appreciated right to religious freedom

Lawyer for province says Dr. Henry has outlined the reasons for her orders publicly

The City of Duncan will implement a new pilot project targeting vandalism this spring. (File photo)
Graffiti trouble? Duncan will give you the brush and the paint to remove it

Initiative based on a successful project to protect Port Alberni from unwanted spray paint

A sample of guns seized at the Pacific Highway border crossing from the U.S. into B.C. in 2014. Guns smuggled from the U.S. are used in criminal activity, often associated with drug gangs. (Canada Border Service Agency)
B.C. moves to seize vehicles transporting illegal firearms

Bill bans sale of imitation or BB guns to young people

BC Housing minister David Eby is concerned that Penticton council’s decision to close a local homeless shelter will result in a “tent city” similar to this one in Everett, Wa. (Olivia Vanni / Black Press file)
‘Disappointed and baffled’ B.C. housing minister warns of tent city in Penticton

Penticton council’s decision to close a local homeless shelter could create tent city, says David Eby

This was the scene outside North Saanich’s Parkland Secondary School after an attempted but unsuccessful break-and-enter into the school torched an ATM inside of it. Sidney/North Saanich RCMP did not make any arrests and currently lack suspects as the investigation continues. Members of the public who may have witnessed something or possess other information can contact police at (250) 656-3931 or to Crimestoppers at 1-800-222-TIPS. (Submitted)
Money to burn: burglars torch North Saanich high school ATM

Police dogs searched the exterior and interior of the school after early morning break-and-enter

Most Read