Tesla Invests $1.5 Billion In Booming Bitcoin, Will Accept Cryptocurrency For EV Purchases
Early in January, JP Morgan predicted Bitcoin's future price
could surge upwards to $146K a coin with a market cap of around $2.6 trillion, which would rival gold as an alternative form of investment. Of course, this theory hinged on the speculation that volatility would decrease and that private companies would latch onto the coin and propel it to those impressive numbers. Barring the volatility which remains to be seen, we may be witnessing the first steps in the skyrocket of Bitcoin
, as Tesla
reported that it invested $1.5 billion into the cryptocurrency.
Over the past few weeks, Tesla fans and customers have requested that Elon Musk
accept Bitcoin payments for vehicle purchases. This would make sense as the price of Bitcoin has skyrocketed, and turning the coin into cash can be difficult for an individual. As of late, Musk has been supporting both Bitcoin and Dogecoin on Twitter, which seems to signify he is at least interested. Evidently, a new SEC filing makes it appear he is more than just interested
In its annual 10-K report with the SEC, Tesla reported the purchase of $1.5 billion in Bitcoin in January of this year. This was possible because the company “updated [its] investment policy to provide [it] with more flexibility to further diversify and maximize returns on […] cash that is not required to maintain adequate operating liquidity. “ Furthermore, Tesla “expect[s] 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.” If you want to read up on the cryptocurrency
moves Tesla is making, you can read the excerpt from the SEC 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. 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. We believe our bitcoin holdings are highly liquid. However, digital assets may be subject to volatile market prices, which may be unfavorable at the time when we want or need to liquidate them.
Overall, this is an incredibly bold move from Tesla, but it could soon reduce Bitcoin volatility and payout dividends over time. Just doing some napkin math, if Tesla bought Bitcoin at January’s low, the company would have made $300 million in unrealized profits so far.