Tesla announced that they purchased $1.5 billion worth of Bitcoin. During their filing with the Securities and Exchange Commission (SEC), CEO Elon Musk justified the purchase as a way to have “more flexibility to further diversify and maximize returns on its cash”.
After that, he went on to mention that the company might start accepting Bitcoin as payment for their vehicles, saying they will “begin accepting bitcoin as a form of payment for our products in the near future…initially on a limited basis, which we may or may not liquidate upon receipt.” We’ve heard about a single dealership accepting the cryptocurrency before, but never an entire major automaker like Tesla.
As reported by Reuters, the Bitcoin they purchased was an investment that cost them roughly 8% of their total cash and cash equivalents, which was around $19 billion at the end of 2020 as per their most recent filing. However, that investment brought into question Musk’s influence on cryptocurrencies, most notably what the Tesla CEO did 2 weeks ago. By simply putting the hashtag #bitcoin in his Twitter bio, it sent the price of Bitcoin up by nearly 20%. Not to mention his tweets on Dogecoin that also helped boost the meme-inspired toke to a record high.
After today’s $1.5 billion dollar purchase, Bitcoin prices have soared up to a price of $43,100, according to CNN. That makes it more expensive than a base model of the company’s Model 3. Also as a result of the purchase came a rise in the price of Tesla’s stock by nearly 2%. Ironically, during their SEC filing, the company warned investors about Bitcoin’s volatility.
It’s worth noting that Musk has gotten in trouble before for his market-influencing antics. Back in 2018, he mentioned on Twitter his desire to take Tesla private at $420 a share, which resulted in the SEC charging him with fraud, although it’s unclear if something similar will happen in this situation.