Saturday, 17 March 2018

This crypto-millionaire bought a Lamborghini for $115 thanks to bitcoin

And it’s not all internet lore. Pietro Frigerio, the dealer principal and general manager at Lamborghini Newport Beach in Costa Mesa, California, saw sales of the car spike as the price of bitcoin skyrocketed.

The dealership, which sells new and used Lamborghinis, along with other used luxury cars like Ferraris, began accepting payments through bitcoin in 2013, a year in which bitcoin saw price fluctuations from below $100 to over $1,000.

In December, when bitcoin hit a high of $19,000, Frigerio saw a jump in cryptocurrency-involved sales with Lamborghinis.

“We went from one, maybe two transactions a month from 2013 until 2016, and in [December 2017] alone we had over 10 transactions,” Frigerio tells CNBC Make.

Even with the price of bitcoin falling, in January, Frigerio sold three Lambos via transactions with the cryptocurrency.

The dealership accepts bitcoin through BitPay, a third-party company that enables transactions between a buyer holding cryptocurrency and a seller who wants U.S. dollars, for a 1 percent fee paid by the dealership.

“We do not really take bitcoin, we do not speculate on [the] exchange rate,” Frigerio says, a point being driven home by bitcoins’ recent plunge. “We just facilitate the owner of bitcoin by running the transaction through a payment service. Similar [to] using Apple Pay or PayPal, or running foreign currency though a foreign exchange financial institution in order to receive U.S. dollars.”

At MotorCars of Georgia, general manager Saszi had heard questions from customers about bitcoin a few years before Saddington came to buy his Lamborghini.

“We had a couple of people come in and say, ‘Do you accept bitcoin?'” Saszi says. “It did seem a little strange at that time, and I really didn’t think anything of it.”

Saszi then heard about sales with bitcoin from Frigerio at Lamborghini Newport Beach, who he says is a friend and colleague. At that time it was infrequent, but not unheard of.

Saddington purchased his car in October.

“The car was on consignment from an individual and the individual took bitcoin directly,” Saddington says, while he paid the dealership in cash for, “the fees and all the taxes and all the remaining administrative costs.” CNBC was unable to reach the original owner of Saddington’s vehicle for comment.

Saddington’s purchase sparked a realization by Saszi in early November that accepting bitcoin might be something the dealership should do on a larger scale.

“I had heard about it from Newport Beach and then Peter bought the car here, and then after that was when we kind of got up on it and decided to do it ourselves,” Saszi says. “Once it started to get big, and we realized it was something we needed to do.”

MotorCars of Georgia also uses BitPay as a way to accept U.S. dollars in exchange for cryptocurrency, although Saszi adds they haven’t sold a car that way yet.

“[Bitcoin] is way too volatile for us to hold it,” Saszi says with a laugh.

Still, even dealerships selling less expensive cars are becoming interested in accepting bitcoin.

Michael’s Auto Plaza in Albany, New York, also began accepting bitcoin payments through BitPay in December. Eugene Rubinchuk, a vice president and part owner at the dealership, which sells used cars with prices ranging from under $15,000 to an $89,000 Bentley, says he saw posts about extravagant cars like Lamborghinis bought with bitcoin on Facebook.

“We thought, ‘Why not make [buying cars with bitcoin] a little more affordable?” Rubinchuk says. “Maybe somebody who doesn’t want to spend $250,000, maybe they want to spend $30,000 to buy a vehicle.”

Since beginning to use BitPay, Rubinchuk says the dealership has completed one transaction with cryptocurrency, selling a 2017 Subaru Impreza for 2.33783 bitcoin, or $34,500 to a man in Virginia.

“It is a way for us to reach customers that we normally wouldn’t,” Rubinchuk says. “Bitcoin skyrocketed last year, and that was all anybody kept talking about, especially for the latter part of the year. So we wanted to be the front-runner.”

The move has garnered global attention for the upstate New York dealer after a wave of press coverage.

“I’ve received calls from Africa, from Europe, from the Caribbean,” Rubinchuk says, and across the country, too. “Our goal isn’t to speculate on the rise and fall of a currency. Our goal is to take that cryptocurrency — or however you pay — put that into cash in our bank account and buy more vehicles with it.”

For all its success as an appreciating asset for earlier adopters, bitcoin’s price instability has made it difficult to use as a currency.

For example, when Saddington bought his Lamborghini in early October, his bitcoins were worth $4,000 to $6,000 apiece. Since bitcoin is now trading at over $8,000, the effective cost of his car has increased, too.

But, Saddington says the splurge was worth it: “For me it is a great marketing tool, it is a great conversation piece.”

Don’t miss: ‘HODL,’ ‘whale’ and 5 other cryptocurrency slang terms explained

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—Video by Jonathan Fazio.

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