Elon Musk’s car company Tesla has purchased $1.5 billion worth of the cryptocurrency bitcoin and announced that it will accept the currency as a form of payment in the future. This investment has led to a huge rally in bitcoin’s value, racing past $43,000 at the time of writing to set a new record.
Tesla made the announcement in a filing with the Securities and Exchange Commission (SEC) on Monday, February 8. Tesla said it earned board approval in January 2021 to “further diversify” its investment strategies to include new forms of currency, including bitcoin.
“As part of the policy, which was duly approved by the Audit Committee of our Board of Directors, we may invest a portion of such cash in certain alternative reserve assets including digital assets, gold bullion, gold exchange-traded funds and other assets as specified in the future,” Tesla said in the filing. “Thereafter, we invested an aggregate $1.50 billion in bitcoin under this policy and may acquire and hold digital assets from time to time or long-term. 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.”
Tesla acknowledged in its filing that the value of “digital assets” like bitcoin are known to be highly volatile and come with associated risks and uncertainties. Tesla also stated that it’s still a Wild West situation when it comes to bitcoin and the rules, laws, and regulations surrounding the currency.
“The extent to which securities laws or other regulations apply or may apply in the future to such assets is unclear and may change in the future. If we hold digital assets and their values decrease relative to our purchase prices, our financial condition may be harmed,” Tesla said.
Tesla also noted that there are currently no centralized issuers or governing bodies for bitcoin, which can lead to security risks and other malicious activities that could in turn compromise Tesla’s position in regards to the currency.
Despite all of the uncertainty, Musk has been a long-time vocal supporter of bitcoin, and now that enthusiasm is becoming even more tangible. Tesla’s investment in bitcoin has also led to a surge in bitcoin prices to record levels.
All of this is happening amid a tumultuous time for the stock market thanks in part to the short squeeze situation surrounding GameStop and other volatile shares. Musk also tweeted about the GameStop situation previously, which in turn led to a spike in the share price (which has since come back down).