Tesla Invests $1.5B in Bitcoin, Plans to Accept Crypto Payments

Tesla also expects to begin accepting bitcoin as a form of payment for its products "in the near future."

AccessTimeIconFeb 8, 2021 at 1:00 p.m. UTC
Updated Sep 14, 2021 at 12:08 p.m. UTC

The announcement that much of the crypto world has been hoping for is here: Tesla has invested in bitcoin.

The electric vehicle maker said Monday in an annual report filed with the U.S. Securities and Exchange Commission that it has put an aggregate $1.5 billion into bitcoin under a new investment policy and that the company may "acquire and hold digital assets from time to time or long term."

The announcement caps a history going back to at least 2018 of Tesla founder and CEO Elon Musk tweeting and commenting on bitcoin and other cryptocurrencies including dogecoin.

A growing number of big institutional investors including Paul Tudor Jones II and Bill Miller have pushed into bitcoin as a potential hedge against inflation, as the Federal Reserve and central banks around the world pump trillions of dollars of freshly created money into financial markets to stimulate their coronavirus-racked economies. Tesla joins publicly traded companies including Michael Saylor's MicroStrategy that have steered corporate money into bitcoin.

Bitcoin's price shot up more than 14% after Tesla's disclosure to a new all-time high of $44,801, based on CoinDesk's Bitcoin Price Index. The jump pushed bitcoin's year-to-date return to about 50%, versus 3.9% for the Standard & Poor's Index of large U.S. stocks.

"We think this is just the start to a much wider adoption from household institutional names, finally ready to make the crossover into the crypto space," Joel Kruger, strategist at the cryptocurrency exchange LMAX Digital, said in an email.

The Tesla announcement and subsequent price move in bitcoin apparently triggered such a flurry of trading activity that big cryptocurrency exchanges including Binance, Coinbase, Gemini and Kraken all experienced technical difficulties.

The 12-year-old bitcoin, which is the oldest and largest cryptocurrency, now has a market valuation of $818 billion, just behind Tesla's $823 billion but ahead of Facebook's $757 billion, according to the website companiesmarketcap.com. Only seven other publicly traded companies in the world are larger than bitcoin, though it's still well shy of gold's $11.7 trillion market value and silver's $1.5 trillion.

According to Tesla's annual report, the investment policy was updated in January to provide "more flexibility to further diversify and maximize returns on our cash that is not required to maintain adequate operating liquidity."

  • The policy includes investment in "alternative reserve assets including digital assets, gold bullion, gold exchange-traded funds and other assets."
  • Tesla also expects to begin accepting bitcoin as a form of payment for its products "in the near future." This would initially be on a "limited basis, which we may or may not liquidate upon receipt."

Musk had stated recently that he's a bitcoin supporter, though he added quickly that he was a bit "late to the party." Over the weekend, he engaged in a series of tweets involving the rapper Snoop Dogg and Kiss rocker Gene Simmons related to another cryptocurrency, dogecoin.

“I should have bought [bitcoin] eight years ago," he said in a chat on Feb. 1. "I do at this point think bitcoin is a good thing.”

Brian Brooks, who recently stepped down as U.S. comptroller of the currency, a top banking-industry regulator, said Monday in an interview on on CoinDesk TV that "for people who are invested in bitcoin it's exciting news." 

"For people who are looking at the rest of the world it's actually a little bit scary news," Brooks said.


Read more about

DISCLOSURE

Please note that our privacy policy, terms of use, cookies, and do not sell my personal information has been updated.

The leader in news and information on cryptocurrency, digital assets and the future of money, CoinDesk is a media outlet that strives for the highest journalistic standards and abides by a strict set of editorial policies. CoinDesk is an independent operating subsidiary of Digital Currency Group, which invests in cryptocurrencies and blockchain startups. As part of their compensation, certain CoinDesk employees, including editorial employees, may receive exposure to DCG equity in the form of stock appreciation rights, which vest over a multi-year period. CoinDesk journalists are not allowed to purchase stock outright in DCG.

Trending

1
CoinDesk - Unknown
NFT Platforms Should Be Caught by EU Money-Laundering Overhaul, Lawmakers Say

Unhosted wallets and decentralized finance were left largely unscathed by two landmark crypto laws agreed to last week, but left-wing lawmakers may seek another go as they discuss dirty-money rules.

CoinDesk - Unknown
2
CoinDesk - Unknown
Bitcoin se recupera y supera los $19K; Nomura advierte de una recesión en EE. UU. y Reino Unido

Nomura escribió acerca de una recesión en la eurozona, el Reino Unido y Asia Pacífico, lo que podría influir en los precios de las criptomonedas.

CoinDesk - Unknown
3
CoinDesk - Unknown
Argentinos se refugian en stablecoins durante el fin de semana tras dimisión del ministro de Economía

Los principales exchanges del país informaron que los usuarios compraron hasta tres veces más criptomonedas estables que durante un fin de semana normal, en medio una crisis económica en ciernes.

CoinDesk - Unknown
4
CoinDesk - Unknown
Polkadot Builder Parity Technologies Adds 3 Execs to Leadership Team

The new executives joining Parity are Eran Barak (COO), Peter Ruchatz (CMO) and Fahmi Syed (CFO)

CoinDesk - Unknown