In a filing with the Securities and Exchange Commission, the electric vehicle maker said it bought the bitcoin for “more flexibility to further diversify and maximize returns on our cash.”
The company also said that very soon it will start accepting bitcoin as one of their payment methods for its products “subject to applicable laws and initially on a limited basis.”
This move would make Tesla to be the first giant automaker to do so. The $1.5 billion worth of bitcoin will give the company liquidity in the cryptocurrency once it begins to accept it for payments.
The company has over $19 billion in cash and cash equivalents on hand at the end of 2020, based on its most recent filing.
This move raises questions around CEO Elon Musk’s recent behavior on Twitter, where he has been credited for increasing the prices of cryptocurrencies, including bitcoin and dogecoin by means of posting positive messages that aimed to entice more people into buying the digital currencies.
Two weeks ago, the price of the cryptocurrency went up by as much as 20% right after Musk added the hashtag #bitcoin to his Twitter bio. Two days after that, he said on the Clubhouse social media chat site, “I do at this point think bitcoin is a good thing, and I am a supporter of bitcoin.”
Bitcoin prices soared to new highs a day after Tesla’s announcement, reaching a price of around $48,000 before slipping back slightly. Shares of Tesla were up more than 2% Monday morning. In its SEC filing, however, Tesla warned investors of the unpredictability of bitcoin’s price.
Michael Novogratz, the founder of cryptocurrency investment firm Galaxy Digital, said that he sees the bitcoin price may possibly double to $100,000 by the end of 2021 once big-name companies start to accept the currency as a payment method.
Novogratz told Bloomberg, “You are going to see every company in America do the same thing [as Tesla]. One of the things that connect bitcoin and Tesla and solar stocks and ESG investing is millennials and gen Z. Young people are buying into the future, and they see cryptocurrencies – bitcoin and other cryptos – as their currencies.”