Tesla Invests $1.5 billion in Bitcoin, Crypto Hits Record
Tesla, an electric car company, invests $1.5 billion in bitcoin on Monday, February 8, 2021, gives a big vote of confidence to the cryptocurrency. Consequently, the prices of the crypto hit the record, reaching a new high of all time, setting it as a relatively more stable currency now.
The automaker announced this on Monday in a filing with the Securities and Exchange Commission. The Palo Alto, California-based manufacturer said in a filing, “In January 2021, we updated our investment policy to provide us with more flexibility to further diversify and maximize returns on our cash that is not required to maintain adequate operating liquidity. As part of the policy, we may invest a portion of such cash in certain specified alternative reserve assets.”
The company added, “Thereafter, we invested an aggregate $1.50 billion in bitcoin under this policy. Moreover, we expect to begin accepting bitcoin as a form of payment for our products in the near future, subject to applicable laws and initially on a limited basis, which we may or may not liquidate upon receipt.”That would make Tesla the first major automaker to accept do so.
Tesla’s move into bitcoin represents an investment of 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 embrace of the bitcoin by the leading car company lends increased legitimacy to the electronic currencies which are facing skepticism in spite of performing so well in recent years.
Bitcoin Surges After News of Tesla Investment
Bitcoin rose as much as 16% to an all-time high of $44,795.20 on the news, Tesla invests in bitcoin. It was up about 12% at $43,218.69 at 8:59 a.m. in New York. Tesla shares were up more than 2% Monday morning. Tesla warned investors of the volatility of bitcoin’s price in its SEC filing.
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The moves raised immediate questions around CEO Elon Musk’s behavior on Twitter in recent weeks, 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 Tesla owned added the hashtag #bitcoin to his Twitter bio, in a move that helped to briefly push up the price of the cryptocurrency by as much as 20%. Two days later, he said on the social medial chat site Clubhouse: “I do at this point think bitcoin is a good thing, and I am a supporter of bitcoin.”
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