World’s largest electric vehicle and battery maker Tesla has bought $1.5 billion worth of bitcoin, the cryptocurrency. The announcement led to a surge in Bitcoin prices and touched $47,000 for the first time.
In a filing with the US Securities and Exchange Commission (SEC), the company said it bought the bitcoin for “more flexibility to further diversify and maximize returns on our cash.”
Tesla, owned by billionaire Elon Musk, also said it will start accepting payments in bitcoin in exchange for its products “subject to applicable laws and initially on a limited basis.” That would make Tesla the first major automaker to do so. The $1.5 billion worth of bitcoin will give Tesla liquidity in the cryptocurrency once it starts accepting it for payments.
Tesla’s move into bitcoin represents a significant percentage of its cash in the investment. The company had more than $19 billion in cash and cash equivalents on hand at the end of 2020, according to its most recent filing.
The moves raise questions around Mr. Musk’s recent behavior on Twitter, where he has been credited for increasing the prices of cryptocurrencies like bitcoin and dogecoin by posting positive messages that have encouraged more people to buy the digital currencies.
Two weeks ago, the billionaire added the hashtag #bitcoin to his Twitter bio, a move that helped to briefly push up the price of the cryptocurrency by as much as 20 percent. Two days later, he said on the social media chat site Clubhouse: “I do at this point think bitcoin is a good thing, and I am a supporter of bitcoin.”
Meanwhile, in the SEC filing, Tesla also acknowledged the concerns associated with the trading of cryptocurrencies. Without centralized issuers, digital assets are subject to security breaches, cyber attacks, as well as human errors or computer malfunctions that may result in the loss of private keys needed to access such assets, the company said.
But the fact that Tesla, one of the world’s most influential companies, and billionaire Elon Musk have invested in Bitcoin is a massive sign of support for the cryptocurrency, which has been criticized by policymakers for facilitating money laundering and fraud.
Tesla, which joined the S&P 500 index in December, delivered close to 500,000 vehicles globally last year. It aims to increase its production to more than 750,000 units this year.
Last month, Tesla reported a 157 percent annual surge in fourth quarter net profit to $270 million on the back of increased demand for its electric vehicles.