Tesla CEO Elon Musk has been a proponent of cybercurrency for some time, and now the company is investing it.
Tesla CEO Elon Musk has promoted Bitcoin and other cybercurrencies and now his EV company is supporting that with a $1.5 billion investment – while also indicating it will begin taking bitcoin as payment for its products and services.
The company explained the move in a Monday filing with the Securities and Exchange Commission that said Bitcoin provides “more flexibility to further diversify and maximize returns on our cash.”
The precise timing by which Tesla will start accepting bitcoin purchases wasn’t disclosed and would be “subject to applicable laws and initially on a limited basis,” Tesla said in its filing. It would become the first major automaker to accept cybercurrency.
Bitcoin surged in value on the news, reaching as high as $44,200 early Monday, before settling back into the $42,000 range, that was still substantially ahead of where it has been, the cryptocurrency at less than $38,000 the day before and dropping to barely $30,000 at one point in January.
Musk driving bitcoin acceptance
Bitcoin, like other virtual currencies, is known for experiencing wide swings in short periods, but it has generally been on an upward trajectory during the past 12 months from a spring 2020 low of barely $5,000.
Tesla CEO Elon Musk showing he’s clearly a cybercurrency fan.
Tesla CEO Musk, an avid user of Twitter and other social media, has been openly praising cybercurrencies, Bitcoin in particular.
“I do at this point think Bitcoin is a good thing, and I am a supporter of bitcoin,” he said during a session on the chat site Clubhouse in January. That came just two days after Musk added the #bitcoin hashtag to his own Twitter bio.
“I think Bitcoin is really on the verge of getting broad acceptance by sort of the conventional finance people,” he added during the Clubhouse session.
The decision to directly invest in Bitcoin appears to be part of Tesla’s new strategy of accepting the currency. It represents less than 10% of the $19 billion in cash and cash equivalents the automaker had available at the end of 2020, according to company financial statements.
Buying a Tesla with bitcoins
Exactly how Tesla will handle Bitcoin purchases is unclear as the currencies frequent fluctuations mean that its value could change dramatically in just the time it takes for a customer to complete a purchase of a vehicle like the Tesla Model S.
Musk confirming his appreciation of cybercurrency.
At a base price of $69,420, the long-range version of the sedan would be worth about 1.612 bitcoins as of noon EST today. Shortly after the news broke, a buyer would have paid 1.569 bitcoins. But, overnight, it would have cost 1.766 bitcoins, and would have required 2.282 bitcoins barely a week ago.
Reflecting this, Tesla noted its financial reports could become more volatile going forward, the automaker accounting for the holdings as long-term intangible assets.
The move by Tesla came following a board committee meeting that changes policies on investments that now will allow Tesla, among other things, to speculate in gold-related assets.
While Tesla is the first automaker to announce it will accept Bitcoin, auto buyers have other places where they can spend the cybercurrency. That includes BitCar, a web service specializing in fractional ownership of exotic vehicles, such as Lamborghinis, as well as rental-car service E-Z Rent a Car, and a number of auto dealers including Michael’s Auto Plaza, in Albany, New York.
Tesla stock, which has had a bitcoin-like trajectory over the last year, began trading up after the cybercurrency news was announced. At noon, it stood at $864.46 a share, up nearly 2% from the opening bell.
