Bitcoin hits record highs after Tesla invests $1.5bnwritten by Bella Palmer
Bitcoin rose above $48,000 before falling back slightly, but it remains 25% higher than five days ago
Bitcoin has hit record highs for a second day after Elon Musk's car company Tesla said it had bought about $1.5bn (£1.1bn) of the cryptocurrency.
Bitcoin rose above $48,000 (£34,820) before falling back slightly, but it remains 25% higher than five days ago.
Some investors took Tesla's move as a signal that Bitcoin would become a mainstream financial asset.
However, there was some criticism about a green car firm investing in such an energy intensive currency.
Bitcoin currently uses more energy than Argentina every year, according to analysis from the University of Cambridge.
Production of the cryptocurrency, known as "Bitcoin mining", needs energy-hungry computer hardware and ever-greater amounts of processing power.
Mike Butcher, an editor at news website Techcrunch, tweeted: Tesla: Sells carbon credits to buy Bitcoin, which requires as much energy (not always Green energy) as a small country to mine.
Explaining its investment on Monday, Tesla said that it wanted to maximise returns on cash lying dormant in the company's accounts.
The move sparked market interest which carried on into Tuesday.
Shares of companies that provide trading platforms for Bitcoin and the technology to mine the cryptocurrency have surged in China, South Korea and Australia, and big computer chip-making firms such as SK Hynix also rose.
The cryptocurrency has already risen in value by 62% this year, on top of a 300% rally in 2020, as investors search for alternative assets at a time when interest rates in many countries are at record lows.
Bitcoin has had some interest from money managers, including Blackrock, which recently changed a handful of investment mandates to allow some of its funds to invest in the currency.
However, central banks remain sceptical about the cryptocurrency. In October, Bank of England governor Andrew Bailey cautioned over Bitcoin's use as a payment method.
But Bitcoin scepticism does not mean that central banks and regulators are against digital currencies per se.
This article is for information purposes only.
Please remember that financial investments may rise or fall and past performance does not guarantee future performance in respect of income or capital growth; you may not get back the amount you invested.
There is no obligation to purchase anything but, if you decide to do so, you are strongly advised to consult a professional adviser before making any investment decisions.