The investments made by Elon Musk’s Tesla and Jack Dorsey’s Square in bitcoin are a signal they believe in the “monetary revolution” of cryptocurrencies, Castle Island Ventures’ founder Nic Carter said.
The investments in bitcoin made by Tesla and Square are more symbolic than they are a form of prudent balance sheet management, Carter said in a webinar at Citi’s digital money symposium on 29 March.
“When Square does it they are signalling…they are aligned with the mission and that they really believe in this effectively monetary revolution and Jack Dorsey has made it very clear that he is part of that, he is on board,” Carter said.
Payments business Square, which was founded by Twitter CEO Dorsey, said in February it had bought an additional $170m of bitcoin having invested $50m in the cryptocurrency in October.
Dorsey has repeatedly voiced his support for bitcoin which he said would become the “native currency” of the internet.
Carter said Tesla’s $1.5bn investment in bitcoin in February was similarly a signal to potential customers that the company was aligned with crypto.
“Tesla again I see as signalling, Elon Musk is saying ‘I believe in this project, it’s really interesting to me, and we are an exciting glamorous company so we are going to align ourselves with this exciting asset that lots of millennials find to be cool,’” Carter said.
“Would I necessarily recommend it as part of a corporate finance strategy? Not necessarily,” he said.
Carter — whose Castle Island Ventures fund invests in early-stage crypto and blockchain startups — said he did not recommend that his portfolio companies held their balance sheets in volatile crypto assets “because we prefer to have predictability,” he said.
Musk announced on 24 March that Tesla was now accepting payment in bitcoin for its electric cars and said it would hold the bitcoin it received as bitcoin and not convert it into cash.
As another sign of Tesla’s endorsement of bitcoin, the company revealed in a 15 March filing that Musk’s job title was now “Technoking of Tesla” and the company’s chief financial officer Zach Kirkhorn was now known as “Master of Coin”.
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