Tesla said it bought around US $ 1.5 billion worth of Bitcoin cryptocurrency, which took the currency to a record high of US $ 46,370. The electric vehicle company also said it plans to start accepting Bitcoin as a payment method for its cars.
Tesla CEO Elon Musk had added #bitcoin to his Twitter profile page, which increased the value of the cryptocurrency. He then withdrew it, but continued to endorse Bitcoin and other cryptocurrencies, including Dogecoin, which rose 50% after its approval.
Tesla’s purchase of Bitcoin was buried deep in its 2020 Annual Report. At current prices, 0.82 bitcoin would be enough to buy a base Tesla Model 3 (US $ 37,990). In a stock exchange filingTesla said it “updated its investment policy” in January and now wants to invest in “reserve assets” such as digital currencies, gold bullion or exchange-traded funds. He said he had already purchased US $ 1.5 billion worth of Bitcoin and may “acquire and hold digital assets” in the future.
“Additionally, we plan to start accepting Bitcoin as a form of payment for our products in the near future, subject to applicable laws and initially on a limited basis,” Tesla said.
A week ago, Musk said in a tweet that Bitcoin was “on the verge” of greater acceptance by investors.
“I think we’ll see an acceleration in companies looking to allocate to Bitcoin now that Tesla has taken the first step,” Eric Turner, vice president of Market Intelligence at Messari, a cryptocurrency research firm, Recount BBC.
“One of the largest companies in the world now owns Bitcoin, and by extension every investor who owns Tesla, or even just an S&P 500 fund, is exposed to it as well.”
BlackRock, the world’s largest asset manager, along with payment companies Square and PayPal, are among the companies known to invest or hold Bitcoin.
“If lesser mortals had made the decision to put part of their balance sheet in Bitcoin, I don’t think it would have been taken seriously,” Thomas Hayes, managing member of Great Hill Capital in New York, Recount Reuters.
“But when the richest man in the world does it, everyone has to take a second look.”
The news sparked major cryptocurrency exchanges and caused technical issues for exchanges like Kraken, Gemini, and Binance, according to Counter.
A well-known supporter of cryptocurrencies, Musk has regularly weighed on the retail investment frenzy of the past month, also pushing up the prices of the digital currency based on Dogecoin memes and shares of US video game chain GameStop.
“Dogecoin is the people’s crypto,” Musk tweeted last Thursday.
Ð is for Ðogecoin! Instructional video.https://t.co/UEEocOfcTb
– Elon Musk (@elonmusk) February 8, 2021
He also tweeted a meme of himself as Mandrill from The Lion King movie holding the golden haired puppy who is Dogecoin’s mascot. The post received nearly 999,000 likes.
You’re welcome pic.twitter.com/e2KF57KLxb
– Elon Musk (@elonmusk) February 4, 2021