Elon Musk says Tesla to accept dogecoin as payment; cryptocurrency soars 20%

Tesla Inc chief Elon Musk said on Tuesday the electric carmaker will accept dogecoin as payment for merchandise on a test basis, sending the meme-based cryptocurrency up over 20%. "Tesla will make some merch buyable with Doge & see how it goes," Musk said in a tweet. The carmaker's shares were down 3% in early trading, amid broader market declines.

Meme-based cryptocurrency, Dogecoin, popular among retail investors, raced up to $0.20 after the tweet. Musk's tweets on the cryptocurrency, including the one where he called it the "people's crypto", have helped the meme coin soar 5,859% over the past year, according to data from Coinbase website.

"Elon Musk has been an advocate for the crypto community for many years. His latest announcement will usher in a new era of commerce and trailblaze a path for altcoins to expand their use case," said Chris Kline, co-founder of Bitcoin IRA.

Musk did not specify what merchandise, whose prices start from $50 and go as high as $1,900, could be bought with dogecoin.

Tesla sells apparel, 'Giga Texas' belt buckles and mini models of its vehicles as well as quirky limited-edition items such as the 'Cyberwhistle', which is modeled after its much-awaited Cybertruck. It recently launched a quad bike 'Cyberquad' for kids, also modeled after the truck.

Musk, a cryptocurrency supporter, has often endorsed dogecoin and said it is better for transactions, most recently in an interview to the Time magazine, which named him "Person of the Year" for 2021 on Monday.

He had asked users in May if they wanted Tesla to accept dogecoin in a Twitter poll. He had called dogecoin a 'hustle' during his guest-host spot on the "Saturday Night Live" comedy sketch TV show in May.

Musk, who has over 66 million followers on Twitter, has been highly engaged in this year's retail trading frenzy, tweeting about cryptocurrencies and helping send their prices soaring.

The EV maker stopped accepting bitcoin for car purchases, less than two months after the company began to accept the world's biggest digital currency for payment.

"This is more or less noise at Tesla," Tom Martin, senior portfolio manager at Globalt Investment said. "I view it as being mercurial or just making fun."

In the meanwhile, Bloomberg writes, that Elon Musk has been a vocal supporter of Dogecoin, a “meme” cryptocurrency featuring a picture of a Shiba Inu dog. The tweets from the world’s richest person have contributed to its rising popularity.