Tesla and Bitcoin (BTC) are nothing new to discuss together as they both hold several ties among them. However, there were not many instances when the relation between electric vehicle giant and flagship cryptocurrency were pointed out in critical manner. Recently the popular American economist and Nobel prize winner went on to say that prices of both the assets are supported by ‘hype and faith.’
Krugman, who is also a columnist for the New York Times, wrote an opinion on Tuesday, 27th December, with the title asking “Did the Tesla story ever make sense?” Along with many other facts and options, he talked about Tesla and Bitcoin, stating that they both have many more similarities than anyone thinks.
While talking about bitcoin, he economist described that nobody has found any serious use case of cryptocurrency despite efforts made throughout many years, except for money laundering. However, the price surged given the hype behind it and it managed to sustain and stay relevant due to a dedicated community of ‘true believers.’
In addition, he said that similar is the case with Tesla despite the fact that the company actually makes useful things.
Tesla and Bitcoin (BTC) had this in common that the EV giant had significant bitcoin holdings. In Q3 earnings report, the company revealed that the company sold a massive amount out of its overall reserves and remained with only 218 million USD worth holdings which was earlier 1.26 billion USD.
Meanwhile, both of them lost almost similar amounts of value with Bitcoin (BTC) lost almost 76% from it’s all time high in a year while Tesla also lost around 65% during the similar timeframe.
Tesla does not seem Krugar similar to Apple, Microsoft and Amazon like mega-corporations as they maintained their dominance. He argued that these companies have benefited due to their “strong network externalities.” For other companies’ growth, he cited the reason that “everyone uses their products because everyone else uses their products.”
Further he added that it’s not clear until now how Tesla could have a hold over the EV business for the long term. He thinks that there are no strong network externalities in the business and the production of electric vehicles only is not a ‘network externality business’. It’s hard until the price drops that why Tesla had a huge valuation from the market.
Source: https://www.thecoinrepublic.com/2022/12/30/nobel-prize-winner-economist-noted-tesla-and-bitcoin-are-similar/