Tesla buys $1.5 billion worth of bitcoin and reveals plans to accept crypto payments
Tesla has announced that it has bought $1.5 billion in ever-growing cryptocurrency, bitcoin.
The company has stated that it bought the large amount of bitcoin for “more flexibility to further diversify and maximize returns on our cash.” Tesla will also apparently start accepting payments in bitcoin, an event that would render it the first major automaker to accept bitcoin. The $1.5 billion in bitcoin will also provide Tesla with liquidity in the cryptocurrency when it starts accepting it for payments.
Tesla’s latest venture into the realm of bitcoin and cryptocurrency displays an investment of a major percentage of its cash. According to its most recent filing, the company possesses over $19 billion in cash or cash equivalents by the end of 2020.
This announcement definitely raised some eyebrows and brought about some questions around CEO Elon Musk’s behavior on Twitter as of late, since he has been credited for increasing the prices of cryptocurrencies like bitcoin and dogecoin after he posted supportive messages pushing people to buy these cryptocurrencies.
About two weeks ago, the Tesla owner, who recently became the richest man in the world, added the hashtag #bitcoin to his Twitter bio. This pushed many people to buying the cryptocurrency and increasing its price by around 20%. Two days later, he appeared on social media chat site Clubhouse and stated:
I do at this point think bitcoin is a good thing, and I am a supporter of bitcoin.
Bitcoin’s prices achieved new highs on Monday after Tesla’s announcement, and reached around $44,200, a 20% increase. Tesla shares also increased by over 2.5% in premarket trading, and the company warned investors of the frivolity of bitcoin’s price.
The billionaire has definitely gotten into trouble for his controversial tweets, but it is not yet clear as to how that applies to his tweets regarding bitcoin and cryptocurrencies. In an infamous spectacle, the SEC charged Musk with fraud back in 2018 for his tweets about taking the company private at $420 per share. In the end, Musk settled with the SEC and was forced to give up his position as the chairman of the company’s board, as well as pay a $20 million fine and even an additional $20 million for the company.