Tesla And MicroStrategy to Face Massive Revenue Hit if Bitcoin Fails

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Tesla

Tesla and MicroStrategy — ready to hit the rock bottom if Bitcoin dramatically falls in the future

Bitcoin, the most popular cryptocurrency in the highly volatile cryptocurrency market, is present in the crypto wallets of Tesla and MicroStrategy. These two are popular tech companies totally invested in Bitcoin, despite being aware of the volatility level of Bitcoin. It has been speculated that both Tesla and MicroStrategy can experience huge losses if the Bitcoin price declines in the highly volatile cryptocurrency market. Recently, the stock of MicroStrategy declined by 29% on June 13, 2022, while there is a meltdown in the cryptocurrency price.

Bitcoin created havoc in the cryptocurrency market after dropping its price by over 12% to below US$24,000.  This decrease in the Bitcoin price holds the potential to incur losses in the crypto wallets of all crypto investors including Tesla and MicroStrategy. According to CoinMarketCap, the current price of the topmost cryptocurrency is US$21,222.70 with a down of 3.28% and a market cap of US$407.35 billion with a volume of US$47.90 billion.

The recent downfall of Bitcoin hit the lowest level in the last 18 months. MicroStrategy is known for holding over 129,200 BTC tokens as of March 31, 2022, on the balance sheet. The main aim is to issue debt to finance more Bitcoin purchases with an alert to sell Bitcoin if the company fails to generate the necessary cash flow for the debt service. The cryptocurrency price was below the average purchase price of US$30,700 of MicroStrategy. The drastic fall in the Bitcoin price may create a huge impact on MicroStrategy in buying more Bitcoin in the cryptocurrency market for its crypto wallet. The key reasons are crypto investors have started losing confidence and the company will face difficulties to raise more debts in the future.

Meanwhile, Tesla is highly popular for accepting Bitcoin as a payment mode. One of the risky ventures of Tesla has incurred a loss of US$101 million on Bitcoin. The cryptocurrency has entered the darkest phase for Tesla and other crypto investors who are eagerly waiting to drive profits in crypto wallets. Tesla needs to realize the cryptocurrency market is barely above the cost basis that can affect the business related to Bitcoin. Even if the cryptocurrency price drastically falls in the market, Elon Musk will continue to invest in Bitcoin with Tesla. It has been speculated that Tesla has already incurred a huge loss of more than US$450 million on the remaining investment with this cryptocurrency. It will be shown in its quarterly report of Tesla in July end. This will tend to affect the supply chain pressure in the China market of Tesla.

Thus, depending on the highly volatile cryptocurrency can affect the revenue and the economy of companies in the nearby future.  

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