Tesla has bought $1.5 billion in Bitcoin, the company said Monday in an SEC filing, adding that it expects 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.”
The move comes amid an updated investment policy agreed in January 2021 designed to “provide us with more flexibility to further diversify and maximize returns on our cash that is not required to maintain adequate operating liquidity” Tesla said.
“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” Tesla added, saying the Bitcoin was bought on this basis.
Tesla buys Bitcoin, as regulators and banks fret.
Tesla is — once again — creating a radical playbook likely to open the door to other large business to use Bitcoin.
The move comes after BlackRock, the world’s largest asset manager, gave at least two of its funds the ability to invest in bitcoin futures, while warning in its own SEC filing that exchanges used to trade Bitcoin “have experienced technical and operational issues, making bitcoin prices unavailable at times. In addition, the cash market in bitcoin has been the target of fraud and manipulation,” it added.
Tesla had over $19 billion in cash to hand at the end of 2020, according to its most recent filing. Bitcoin surged to above $44,000 on the news; a fresh high for the volatile asset, while Tesla shares rose more than 2.5% in premarket trading.
“If I were a regulator … I would be kind of hyperventilating at the success of [bitcoin] at the moment and I’d be arming myself to deal with it,” former Goldman Sachs CEO Lloyd Blankfein told CNBC in late January, warning against bitcoin as either a medium of exchange or as a store of value due to its its extreme price swings.”
Cryptocurrencies like Bitcoin exist electronically and use a peer-to-peer system. There is no central bank or government to manage the system. The landscape for cryptocurrency trading remains highly fragmented with many exchanges: