Bitcoin traded up around 15% early Monday at a new all-time high of $44,623, likely due to the revelation that Tesla Inc. (NASDAQ: TSLA) has added $1.5 billion in the digital currency to its investment holdings.
In Tesla’s Form 10-K annual report filed Monday morning with the U.S. Securities and Exchange Commission, the company said it had “updated” its investment policy to provide “more flexibility” and “maximize returns” on cash not needed to “maintain adequate operating liquidity.”
The company said that its audit committee approved the change that allows Tesla to invest a “portion” of its cash in “certain alternative reserve assets including digital assets, gold bullion, gold exchange-traded funds [ETFs] and other assets as specified in the future.” The investment in bitcoin occurred following the audit committee’s approval.
Then came the kicker: “Moreover, we expect 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, which we may or may not liquidate upon receipt.”
Tesla included the disclosure in the risk factors section of its annual report. Noting the “highly volatile” nature of digital assets, the company said that “long-term adoption [of digital assets] … is unpredictable. … [T]heir lack of a physical form, their reliance on technology for their creation, existence and transactional validation and their decentralization may subject their integrity to the threat of malicious attacks and technological obsolescence.”
And, because digital currencies are currently mostly unregulated, future regulation could “harm” the company’s financial condition.
In a live appearance last week on new social media app Clubhouse, Tesla CEO Elon Musk admitted being “late to the party” when it comes to bitcoin, but he’s a “supporter.” In that appearance, Musk also referred to his comments on Dogecoin that managed to get his Twitter account locked for a time. Dogecoin, originally created as a joke to poke fun at digital currencies, has doubled in price (from around $0.04 to $0.08) since Musk’s comments and the total value of the currency is more than $13 billion. Some joke.
Tesla is not the first company to jump on the bitcoin bandwagon. Payments and point-of-sales provider Square holds about $50 million in bitcoin (about 4,700 coins).
In December, MicroStrategy announced that it held approximately $1.125 billion in bitcoin and that the purchase price for the 70,470 bitcoins it held was $15,964 apiece. The company has since purchased $20 million in bitcoin (609 bitcoin) at an average price of $33,810, according to Coindesk.
Last October, Paypal announced that its users could buy, hold and sell cryptocurrencies like bitcoin, and it plans to make digital currencies available as a payment method.