Advertisement
New Zealand markets closed
  • NZX 50

    12,105.29
    +94.63 (+0.79%)
     
  • NZD/USD

    0.5986
    -0.0020 (-0.34%)
     
  • NZD/EUR

    0.5539
    -0.0004 (-0.07%)
     
  • ALL ORDS

    8,153.70
    +80.10 (+0.99%)
     
  • ASX 200

    7,896.90
    +77.30 (+0.99%)
     
  • OIL

    82.76
    +1.41 (+1.73%)
     
  • GOLD

    2,240.60
    +27.90 (+1.26%)
     
  • NASDAQ

    18,258.63
    -22.21 (-0.12%)
     
  • FTSE

    7,952.62
    +20.64 (+0.26%)
     
  • Dow Jones

    39,779.70
    +19.62 (+0.05%)
     
  • DAX

    18,492.49
    +15.40 (+0.08%)
     
  • Hang Seng

    16,541.42
    +148.58 (+0.91%)
     
  • NIKKEI 225

    40,168.07
    -594.66 (-1.46%)
     
  • NZD/JPY

    90.5110
    -0.2690 (-0.30%)
     

Bitcoin surges after Musk says Tesla could start accepting it again

Yahoo Finance’s Myles Udland, Julie Hyman, and Brian Sozzi discuss the Bitcoin price action after Tesla CEO Elon Musk suggested that the company may accept the cryptocurrency in the future.

Video transcript

MYLES UDLAND: We will talk about Elon Musk's tweets over the weekend, which I believe we have loaded up here from the YFi Interactive. Musk talking about the future of Tesla, accepting Bitcoin as a payment. Here you go. Elon Musk catching flak. This is from "Cointelegraph."

What we have seen-- OK, so, we've got some manipulation there with Musk's tweets. I believe there was a tweet from Musk himself. There you go. So, we sold 10% of our holdings to confirm that Bitcoin could be liquidated easily. When there's confirmation of 50% clean energy usage by miners, a positive future trend, Tesla will resume allowing Bitcoin transactions.

ADVERTISEMENT

So, I don't know. I don't find Elon Musk tweeting about Bitcoin all that interesting, but I do find Tesla's involvement with Bitcoin interesting in this respect. As the "Journal" notes this morning in a front page story, the challenges of holding Bitcoin on your balance sheet for a corporation are many. Namely, it can only be marked down in value, unless you sell it.

So, I kind of think, guys, the more that this story goes on, I sort of suspect that Tesla didn't know that before they bought Bitcoin and didn't know that they couldn't mark up the value of Bitcoin if they held it on their balance sheet and the value of the coins went up, and that they would be forced to actually do the opposite were the price of Bitcoin over any one quarter to fall below their most recent cost basis, and that only when they sold Bitcoin would they be able to realize a gain on the value of their Bitcoin holdings.

And I kind of think that as the current-- because it's-- it's an indefinitely-- I forget the exact term the "Journal" has there, but the way that Bitcoin is classified on the balance sheet, again, makes it such that you can only mark it down in value unless you sell it for a profit, and then you can realize that profit. And I think until that changes, Julie, that complicates things for companies that are accumulating Bitcoin on the balance sheet as something like basically an investment account or an investment gain. You cannot recognize it as an investment gain.

JULIE HYMAN: Yeah, that would seem to be a problem, one would think. I mean, and I'm just looking again at the Bitcoin chart. Do you guys remember exactly when Musk said first that they were going to put Bitcoin on the balance sheet? I'm blanking on the exact date of that. You guys remember off the top of your head?

MYLES UDLAND: No. Not of the top of my head.

JULIE HYMAN: OK, well, in any case, if you look at the Bitcoin chart, right, and you look at the range that we have seen, and again, my drawing, apologies. You know, obviously, like, over the past few months, we have seen more-- February. There you go.

I mean, and yes, we had the run-up, but then we've had mostly downside for it. So, even if they were going to try and take advantage of the upside, that would be tricky to do, because we've seen Bitcoin pretty much come full circle since-- since Tesla took its position in it. So, I don't know. It's just-- the volatility alone on a balance sheet, even if you were going to mark it up and down, would sort of be a nightmare.

BRIAN SOZZI: Yeah, and you want to know the power of Elon Musk and Bitcoin? I mean, just hop over to the Yahoo Finance trending ticker page, and you see Dogecoin popping, Bitcoin one of the top trending tickers on our website, along with Riot Blockchain. So, it could be an interesting morning for that space.

But Julie, I really like your drawing skills. Maybe can draw a Dogecoin dog over my face. What do you got? Can you do it in real time?

JULIE HYMAN: That I can't do.

BRIAN SOZZI: All right, maybe tomorrow.

MYLES UDLAND: Bitcoin--

[INTERPOSING VOICES]

--digital assets. Bitcoin and other digital assets are considered indefinite lived intangible assets on the balance sheet of a company. They are not investments and they are not currencies. I mean, I guess if I were lobbying for regulatory changes, and I were speaking on behalf of the crypto space in general, maybe I'd like to get that changed, because I mean, I don't think that the idea of holding Bitcoin on your balance sheet to then recognize the gain in the value of some of your cash or equivalent holdings is necessarily a bad strategy. The problem is that it just literally cannot be done right now, given how those assets are classified.

And so, we always hear that crypto folks want to welcome regulatory changes. Well, that might be one that would make it more attractive for this balance sheet adoption meme, which we all heard so much about in the winter when Tesla first did that to really become true. Remember we had guests on saying every company is going to have Bitcoin on their balance sheet. I think given the accounting difficulties around that, does not seem likely that this is going to be happening any time soon.