Elon Musk and Co. never seem to stay out of the headlines. Just a few days after the test flight of the SN9 rocket ended in a spectacular explosion and hijacked news websites, Tesla Inc. has announced in a SEC filing on Monday that it has bought $1.5 billion worth of popular cryptocurrency bitcoin, hinting at the possibility of it being open to accepting bitcoin as a form of payment for its cars in the near future.
This announcement has resulted in the price of bitcoin rising exponentially, as it is currently trading around 14% up at about $43,500- a record high.
Tesla, in regards to its decision of accepting bitcoin as payment, said that it would be “subject to applicable laws and initially on a limited basis, which we may or may not liquidate upon receipt.”
“In January 2021, we updated our investment policy to provide us with more flexibility to further diversify and maximize returns on our cash that is not required to maintain adequate operating liquidity,” the SEC filing read. “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.”
The filing also said that this decision was part of its broad investment policy as a company and was aimed at diversifying and maximizing its returns on cash.
This is not Tesla’s first brush with the popular cryptocurrency. In December 2020, Tesla CEO Elon Musk had enquired about converting “large transactions” of Tesla’s balance sheet into bitcoin in a Twitter exchange with Microstrategy CEO Michael Saylor. Later, Mush had changed his Twitter bio and said “I think bitcoin is really on the verge of getting broad acceptance by sort of the conventional finance people.” This bio was changed a week later.
Musk has been fueling the growth of meme cryptocurrency Dogecoin in the past few days, tweeting about the commodity on the regular. However, when it came to a more concrete decision, the company went with something more stable (at least as stable as a cryptocurrency can be) and opted for Bitcoin over Dogecoin.
The SEC filing also included Tesla’s announcement that it has “updated [its] investment policy to provide [it] with more flexibility to further diversify and maximize returns on [its] cash that is not required to maintain adequate operating liquidity,” adding that it has the option of putting cash into “certain alternative reserve assets” that include “digital assets, gold bullion, gold exchange-traded funds and other assets as specified in the future.”
This move by Tesla could aid both Elon Musk’s company and the popular cryptocurrency, helping bitcoin retain its value and exchange volume.