Tesla has bought $1.5 billion in Bitcoin, with the cryptocurrency surging to record highs on the news.
In a filing with the U.S. Securities and Exchange Commission, the electric vehicle manufacturer also confirmed that it plans to accept BTC as a payment method soon. However, it’s unclear whether or not such payments would be converted into cash immediately afterwards.
The company explained that it has updated its investment policies to ensure that it can “further diversify and maximize returns” on cash that isn’t required to maintain liquidity.
Despite Elon Musk’s relentlessly upbeat tweets about Bitcoin (and other digital assets such as Dogecoin,) the SEC filing was much more clear-eyed about the risks associated with gaining exposure to digital assets. Noting that BTC could continue to be “highly volatile”—and that regulations may change in the future—the document added:
“If we hold digital assets and their values decrease relative to our purchase prices, our financial condition may be harmed.”
‘Thank you to Elon Musk’
Bitcoin had managed to break $40,000 for the first time in over three weeks over the weekend—only to falter and fall to lows of $37,446.
News of Tesla’s investment helped BTC stage an impressive bounce back, surging by 8.5% in the space of just half an hour.
In dollar terms, Tesla is now far more heavily invested in BTC than MicroStrategy, the business intelligence conglomerate that began snapping up crypto last year. However, MicroStrategy still owns far more Bitcoin—buying 71,079 BTC at an average price of $16,109 per coin.
Back in December, MicroStrategy’s CEO Michael Saylor had made an impassioned plea to Musk—telling the Tesla CEO he could do his shareholders a “$100 billion favor” by converting the company’s balance sheet to Bitcoin.
Following that tweet, Musk had replied: “Are such large transactions even possible?”
Throughout January, Musk subsequently adopted an aggressive pro-crypto stance—singing the praises of Bitcoin and smaller cryptocurrencies in posts that were retweeted countless thousands of times.
Saylor wasted little time in responding to the news, writing:
“Congratulations & thank you to @elonmusk & @Tesla on adding #Bitcoin to their balance sheet. The entire world will benefit from this leadership.”
In pre-market trading, Tesla’s stock price was up by a more modest 2.65% to hit $875—and just like Bitcoin, it could end up hitting record highs if it manages to exceed $900.40.
At the time of writing, Bitcoin stood at $43,516.15, taking it tantalizingly close to the much-feted $50,000 level that was touted as a price target for this year.
This flies in the face of Guggenheim’s CIO Scott Minerd, who had warned as recently as late January that there wasn’t enough institutional interest to support a Bitcoin price above $30,000.
Tesla’s newfound exposure to Bitcoin may mean that Elon Musk is more tight-lipped about the cryptocurrency markets in the future, for fear that he could be accused of manipulating the markets. In recent years, the entrepreneur was given a hard slap on the wrist by the SEC for tweets about Tesla that allegedly violated securities laws.