Overnight we saw BTC hit new all-time highs as Elon Musk disclosed that it has bought $1.5bn and would in future accept BTC for the purchase of Tesla cars.
As a quick aside, it has now broken out its gold trading range:
RBC sees more of the same coming from Big Tech:
When we look at Apple as an ecosystem player we note that the firm has industry-leading software, security and a 1.5B install base. While an electric car could be a long-term opportunity, competing with Elon Musk and Tesla (a distributed energy company) is a higher risk proposition ($10B+ in R&D cost) vs. utilizing its install base: Apple Wallet. If the firm decides to enter into the crypto exchange business (multi-billion-dollar industry) we think the firm could immediately gain market share and disrupt the industry (while simultaneously making the USA a leader in crypto for the next 10-20 years). To put some numbers around this, Square generates ~$1.6B/qtr in bitcoin related revenue on an active install base that we estimate to be in the ~30M range. Apple’s install base is1.5B and even if we assume only 200M users would transact, this is 6.66xlarger than Square. Therefore, the potential revenue opportunity would be in excess of $40B/year (15% incremental top-line opportunity). The best part? The R&D cost would be de minimis in our view as Square’s entire R&D budget is under $1B.Net Net: fundamentals at Apple remain secure with a cash flowing business related to iPhones, Peripherals, Computers and services. However, the firm could unlock a multi-billion dollar opportunity with a few clicks while investing into next generation chips as well.
Can Big Tech legitimise BTC? I have no idea. What I can say is that the more that it does so the more BTC becomes a threat to the existing fiat regime operated by sovereign nations. If BTC can displace fiat and dodge taxes then, at a certain point, it becomes a threat to every government.
Big Tech is already fighting on multiple fronts as it undermines sovereign nations:
- via tax avoidance;
- undermining media and feeding the post-truth polarisation beast;
- and anti-trust monopolies.
If it were to add what is effectively its own private currency to the mix then the sovereign blowback will intensify.
In my view, the more BTC succeeds, the closer it comes to failure.
