Which is better for preserving value: digging a Tesla or buying one?

As of today, the price of one Bitcoin is equivalent to a Tesla model 3. If you were given a choice, would you mine one Bitcoin or buy a Bitcoin equivalent to a Tesla?

Recently, Bitcoin successfully broke through the $60,000 mark and then fell back to $53,000, but this did not affect the global enthusiasm for Bitcoin investment. First, Tesla announced its investment in Bitcoin, then Meitu invested in Bitcoin and Ethereum, and this week Tesla announced that its cars can be purchased in the United States by paying Bitcoin. The signals of institutions entering the market one by one tell us that it will be difficult to find a coin soon.

Bitcoin becomes a safe haven asset for institutions

Since Tesla announced its investment in Bitcoin and opened Bitcoin payment methods, institutional investors have rushed into the market. As of the time of writing this article,

Nearly 5% of the circulating bitcoins are held long-term by these institutional investors.

Data shows that 24 entities have hoarded more than 460,500 BTC, equivalent to $22 billion at the current price of Bitcoin. This figure does not include 3 million permanently lost BTC. If institutions maintain their current crazy buying, supply shortages may soon appear.

Institutions currently holding Bitcoin include: Grayscale, holding 653,771 BTC (about US$33.3 billion); MtGox KK, holding nearly 141,690 BTC (about US$7.2 billion); Block.one, estimated to hold 140,000 BTC (about US$7.1 billion); MicroStrategy, holding approximately 71,000 BTC (US$3.6 billion); Tesla, which purchased 38,500 BTC (nearly US$2 billion).

Analysts now expect that allocating a portion of their assets to Bitcoin will soon become standard for businesses, as there are multiple technical reasons to consider Bitcoin as an inflation hedge.

Hard to find a coin

The entry of institutions will accelerate the shortage of Bitcoin supply, leading to a supply and demand dilemma where it is difficult to get one coin.

First, the supply of Bitcoin in circulation is limited, similar to the value storage function of gold. In addition, there is no way to accelerate the new supply of Bitcoin through additional mining.

Large holders further reduce the circulating supply of Bitcoin by purchasing large quantities of Bitcoin from the market and storing them in cold storage. This long-term holding culture of most cryptocurrency participants reduces the already small supply, creating a vicious cycle.

For savvy CFOs, allocating some of their assets to Bitcoin can provide some regulatory hedging and arbitrage, as governments cannot freeze funds.

What’s surprising about Tesla’s decision to buy Bitcoin is the timing of the purchase, as the decision came after the price of BTC had risen 250% in four months.

Tesla's move has helped Bitcoin surpass Tesla in market value, with Bitcoin ranking ninth among all tradable assets.

In the past, buying Bitcoin might have been seen as an incredibly bold move, but now it’s common sense among institutional investors.

According to rough estimates, the asset size of global companies is about 10 trillion US dollars, and 3% of the funds (equivalent to 300 billion US dollars) are allocated to Bitcoin, accounting for about one-third of the total value of Bitcoin's liquid cash.

Considering that more than 60% of Bitcoin’s supply has not moved in over a year, a $300 billion inflow for an asset with a $355 billion free float supply is almost unthinkable.

Furthermore, the total number of newly minted Bitcoins per year is 341,640, which is only $17.4 billion. Therefore, we can safely conclude that a steady allocation of Bitcoin to corporate assets could more than double the current price of Bitcoin.

Mining is worse than speculating in coins

When institutions control most of the circulating Bitcoin, ordinary people will have to spend a higher price to buy it from institutions. At this time, the cost of speculating in coins will be much higher than the cost of mining, so speculating in coins is not as good as mining, and it will become the mainstream. Now, back to the multiple-choice question at the beginning of the article, what will you choose? Join Zaineng now and become a miner! Early layout to avoid missing out on the market is the right choice for rational investors.

Follow Zaineng to learn more about DeFi and mining information. Zaineng is a world-leading Bitcoin mining machine trading platform. It specializes in providing one-stop mining services for miners. At the same time, Zaineng is also a mining machine tokenization platform, providing miners with a decentralized liquidity mining platform.  

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