Tesla buys $1.5 billion in bitcoin. BTC surges above $44,000 to record after Elon Musk’s buys
Tesla announced Monday it has bought $1.5 billion worth of bitcoin.
In a filing with the Securities and Exchange Commission, the company said it bought the bitcoin for “more flexibility to further diversify and maximize returns on our cash.”
Tesla also said it will start accepting payments in bitcoin in exchange for its products “subject to applicable laws and initially on a limited basis.” That would make Tesla the first major automaker to do so. The $1.5 billion worth of bitcoin will give Tesla liquidity in the cryptocurrency once it starts accepting it for payments.
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 moves raise questions around CEO Elon Musk’s recent behavior on Twitter, 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, 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.”
Bitcoin prices surged to new highs Monday following Tesla’s announcement, reaching a price of at least $44,200. Tesla shares were up more than 2% Monday morning. In its SEC filing, Tesla warned investors of the volatility of bitcoin’s price.
Musk has gotten into trouble for his market moving tweets in the past, but it’s unclear how that applies to his tweets about cryptocurrencies. Most notably, the SEC charged Musk with fraud in 2018 for his tweets about taking the company private at $420 per share.
Musk ultimately settled with the SEC, and was forced to give up his role as chairman of the company’s board and pay a $20 million fine on top of another $20 million fine for the company itself.
Source: CNBC Tesla buys $1.5 billion in bitcoin, plans to accept it as payment.
Bitcoin surges above $44,000 to record after Elon Musk’s Tesla buys $1.5 billion worth
In a filing with the Securities and Exchange Commission, Tesla announced Monday that it bought $1.5 billion worth of bitcoin for “more flexibility to further diversify and maximize returns on our cash.” It also said it may invest a future portion of its assets in digital assets and that it will accept bitcoin as payment for products “subject to applicable laws and initially on a limited basis.”
The move makes Tesla the first major automaker to accept bitcoin as payment.
Tesla’s stake in bitcoin “will have a ripple effect across corporations around the global,” Wedbush analyst Dan Ives said in a note. It is a “potential game changing move for the use of bitcoin from a transactional perspective.”
CEO Elon Musk has been talking up bitcoin as well as meme-inspired token dogecoin in recent tweets, which many believe drove the recent runup in these assets.
Tesla’s investment in bitcoin is the latest sign that the volatile cryptocurrency is being widely embraced. Last year, Fidelity Investments, Square and PayPal announced big moves in the space, allowing their customers to be involved in the digital asset.
Interest from high-profile investors such as Paul Tudor Jones and Stanley Druckenmiller also boosted the token. Many even believe bitcoin has the potential to replace safe-haven gold by some institutional investors.
“TSLA hasn’t historically been a company to shy away from publicity, so some will write off today’s announcement as a marketing stunt, but at $1.5 billion, it would be a pretty big stunt,” Bespoke Investment Group said in a note. “Also, while it’s easy to forget, TSLA is one of the largest companies in the world.”
Source CNBC Bitcoin surges above $44,000 to record after Elon Musk’s Tesla buys $1.5 billion worth.
Bitcoin Price Hits Record After Tesla Buys
Tesla’s chief executive, Elon Musk, is known for promoting cryptocurrencies.
The electric-car maker Tesla is known for bucking convention. That apparently extends to using its own corporate cash to buy Bitcoin.
The company disclosed in its annual report on Monday that it had purchased $1.5 billion worth of the cryptocurrency, as part of an initiative begun last month to invest in alternative assets like digital currencies and gold bullion. It added that it expected to begin accepting Bitcoin as a form of payment “in the near future.”
Tesla said it held $19.4 billion in cash and equivalents as of Dec. 31.
Other companies, including the payments processor Square and the business intelligence software provider MicroStrategy, have publicly said they were investing corporate cash in Bitcoin. Tesla is perhaps the most prominent company to do so.
The carmaker’s chief executive, Elon Musk, is known for promoting cryptocurrencies on his widely followed Twitter feed. Most recently, he has cheered on Dogecoin, a digital token begun as a joke but whose price has soared after encouragement by Mr. Musk.
In December, Mr. Musk said on Twitter that Bitcoin was “almost as” shaky as conventional currency. He has previously criticized efforts by central banks to ease monetary policy to support the economy as “massive currency issuance.”
His Twitter pronouncements have caused trouble for Mr. Musk, who recently became the world’s richest man. In 2018, he and Tesla reached a settlement with the Securities and Exchange Commission after he said he had the “funding secured” to take Tesla private at $420 a share. The financing for the effort was not nearly as far along as Mr. Musk made it out to be, and the S.E.C. required him to step down as chairman of Tesla. He and the company were required to pay $20 million each in fines.
Under that deal and a revised agreement he and the S.E.C. reached in 2019, a Tesla lawyer has to approve any Twitter posts in which Mr. Musk discusses the company’s financial condition, earnings forecasts and other important information. The revised agreement came after the securities regulator sought to have Mr. Musk in contempt of court for violating the 2018 agreement with a post, which had not been reviewed by a lawyer, about the number of cars Tesla would produce and deliver in 2019.
Mr. Musk, who has more than 46 million followers on Twitter, has also used the social media platform to encourage the frenzy for the shares of GameStop, the troubled video game retailer. And last year, he criticized how elected officials and others were responding to the coronavirus pandemic and wrote last March that the number of confirmed virus cases would be “close to zero” by the end of April.
Bitcoin reached a record after Tesla’s announcement, rising more than 10 percent in Monday morning trading to above $44,000 per coin.
Source: The New York Times Bitcoin Price Hits Record After Tesla Buys.
