Tesla announced Monday it had bought $ 1.5 billion worth of Bitcoin.
In a filing with the Securities and Exchange Commission, the company said it bought the bitcoin in order to “have more flexibility to further diversify and maximize the returns on our cash.” Tesla also said it will start accepting payments in Bitcoin in exchange for its products. That would make Tesla the first major automaker to accept this. (The $ 1.5 billion bitcoin gives Tesla liquidity in the cryptocurrency once it accepts it for payments.)
Tesla’s move to Bitcoin means investing a significant percentage of its money in the investment. The company had more than $ 19 billion in cash at the end of 2020. This is evident from the most recent submission.
The moves immediately raised questions about CEO Elon Musk’s behavior on Twitter over the past few weeks, where he was credited with increasing the price of cryptocurrencies like Bitcoin and Dogecoin by posting positive news that encouraged more people to buy the digital currencies.
Two weeks ago, the billionaire Tesla owned added the hashtag #bitcoin to his Twitter bio, which helped temporarily raise the price of the cryptocurrency by up to 20%. Two days later, on the Clubhouse social media chat site, he said, “I think bitcoin is a good thing at this point and I am a bitcoin supporter.”
Bitcoin prices rose to new highs on the Monday following Tesla’s announcement, hitting a price of at least $ 44,200. The Tesla share rose in premarket trading by more than 2.5%. Tesla warned investors about the volatility in Bitcoin price in its SEC filing.
Musk has run into trouble in the past because of his market-moving tweets, but it’s unclear how this applies to his tweets about cryptocurrencies. Most notably, in 2018 the SEC accused Musk of fraud for his tweets of taking the company private for $ 420 per share.
Musk eventually settled on the SEC and had to give up his role as chairman of the company’s board of directors and pay a $ 20 million fine on top of another $ 20 million fine for the company itself.
