My1sttoday: Elon Musk’s Tesla buys $1.5 billion Bitcoin, giving the currency a massive boost. The news caused the price of Bitcoin to jump 17% to $44,220, a record high. Tesla said it was trying to maximise returns on cash that is not being used in day-to-day running of the company.
It comes days after Mr Musk added “#bitcoin” to his Twitter profile page, which drove up the price. He removed it days later, but has continued talking about Bitcoin and other cryptocurrencies, including Dogecoin, jumped to 50% after his endorsement.
In a stock market filing, Tesla said it “updated its investment policy” in January and now wanted to invest in “reserve assets” such as digital currencies, gold bullion or gold exchange-traded funds.
It said it had already bought $1.5bn of Bitcoin and could “acquire and hold digital assets” in the future.
“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,” it said.
Mr Musk said a week ago in a tweet that Bitcoin was “on the verge” of being more widely accepted among investors.
We’re seriously seeing a game changer here, which some analysts said Tesla’s investment could be a game-changer for the cryptocurrency.
“I think we will see an acceleration of companies looking to allocate to Bitcoin now that Tesla has made the first move,” said Eric Turner, vice-president of market intelligence at cryptocurrency research firm Messari.
“One of the largest companies in the world now owns Bitcoin and by extension, every investor that owns Tesla, or even just an S&P 500 fund, has exposure to it as well.”
But Neil Wilson, chief market analyst for Markets.com, warned that Bitcoin was a “very volatile” cryptocurrency.
“Tesla is now starting to take on big [foreign exchange] risk – this may not worry a lot of investors, but some conservative types might be concerned,” he said.