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Tesla is now accepting bitcoin as a form of payment for its vehicles, becoming one of the first companies to accept cryptocurrency as a form of payment for its products.
The move came two months after Tesla bought $ 1.5 billion in bitcoin, while CEO Elon Musk continues to support the cryptocurrency. Musk said that any bitcoin received by the company as a form of payment will not be converted into fiat currency, signaling that Musk is optimistic about the long-term potential of the cryptocurrency.
But Tesla’s decision to accept bitcoin as a form of payment for its vehicles can be a terrible deal for consumers who decide to proceed with the offer for two main reasons.
First, consumers who buy a Tesla with bitcoin will face tax consequences, especially if they have big unrealized gains, as sending bitcoin is a taxable event similar to selling a stock.
Cathie Wood of Ark Invest suggests that bitcoin investors who are sitting on large unrealized gains do not sell or trade in the cryptocurrency until potential tax changes by the IRS are implemented. If the IRS reclassified bitcoin as currency instead of property, the tax burden could be significantly less for investors.
Second, in the event that a consumer decides to return their Tesla purchased with bitcoin, Tesla reserves the right to pay the consumer in cash the original purchase price, not in bitcoin, if the cryptocurrency has increased in value since the transaction original.
Alternatively, Tesla reserves the right to return to the consumer the original amount of bitcoin paid if the cryptocurrency has declined in value since the original transaction. In addition, if a consumer overpays in bitcoin, Tesla reserves the right not to return the overpayment to the consumer.
The reasoning behind Tesla’s decision is due to the high volatility of bitcoin, which has seen price movements in a single day of more than 10% in both directions. On Thursday, bitcoin fell by 7%, coming close to the key $ 50,000 level.
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