Bitcoin hit record highs for a second day, after Elon Musk's Tesla Motor Company said it had bought about $ 1.5 billion in cryptocurrency.
Bitcoin's value rose above $ 48,000 before reversing, but is still nearly 25% higher than it was a week ago.
Some investors have taken Tesla's move, as an indication that Bitcoin will become a major financial asset.
However, there has been some criticism about an environmentally friendly car company investing in such an energy-intensive currency.
Bitcoin currently uses more energy than Argentina every year, according to an analysis from the University of Cambridge.
The production of the cryptocurrency, known as "bitcoin mining", requires energy-hungry computers and ever-increasing amounts of processing power.
"Tesla: sells carbon credits to buy bitcoin, which requires as much energy (not always green energy) as a small mining country," said Mike Butcher, editor at TechCrunch.
What is Bitcoin and how does it work?
Bitcoin is a form of digital money. This means that it has no physical form. Instead, units of digital currency are traded over a computer network.
It operates across a global network of thousands upon thousands of nodes - a device within a network like a computer or some other device - that together process and store transactions.
In an explanation of its investments on Monday, Tesla said it wanted to maximize the returns on liquidity inherent in the company's accounts. It also expects to accept Bitcoin payments for its electric cars in the future.
Shares of companies providing trading platforms for Bitcoin and cryptocurrency mining technology rose in China, South Korea and Australia, as did large computer chip makers such as SK Hynix.
The value of the cryptocurrency has already risen 62% this year, on top of a 300% rise in 2020, as investors search for alternative assets at a time when interest rates in many countries are at record low levels.
Bitcoin has garnered some attention from major investment companies, including BlackRock, which recently changed a batch of investment mandates to allow some of its money to invest in the currency.
However, central banks remain skeptical about the cryptocurrency. In October, Bank of England Governor Andrew Bailey warned against using Bitcoin as a payment method, saying it lacked "intrinsic value" unlike cash or gold.
Some institutional investors are also concerned about bitcoin's price volatility.
"For these people who believe in cryptocurrencies, (Tesla investment) gives them another layer of support that cryptocurrency is the future," said Robert Pavlik, senior portfolio manager at Dakota Wealth.
But questioning Bitcoin does not mean that central banks and regulators are against digital currencies per se.
And in China in particular, regulators have begun to adopt issuing their own digital currencies for everyday use.
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