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Tesla buys $1.5 billion in bitcoin and plans to start accepting it as payment for products

  • Tesla announced in an SEC filing Monday that it bought $1.5 billion worth of bitcoin.
  • The company also said it would start accepting bitcoin as a payment method for its products.
  • CEO Elon Musk has been credited for raising the prices of cryptocurrencies, including bitcoin, through his messages on Twitter.

 


The company said it bought the bitcoin for “more flexibility to further diversify and maximize returns on our cash,” according to the filing. In addition to the purchase, Tesla said it would start accepting payments in bitcoin in exchange for its products as well. That would make Tesla the first major automaker to accept bitcoin as payment.

Bitcoin prices surged to new highs Monday following Tesla’s announcement, reaching a price of at least $43,200. Tesla shares were up more than 2% in premarket trading. Tesla warned investors of the volatility of bitcoin’s price in its SEC filing.

Tesla’s move Monday represents an investment of a significant percentage of its cash in the investment. The company had more than $19 billion in cash and cash equivalents on hand at the end of 2020, according to its most recent filing. 


"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 filing reads.

"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 as specified in the future. 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 longterm."

According to the filing, Tesla may also start accepting Bitcoin as a form of payment for its products in the "near future."

With the move, Tesla is following in the footsteps of MicroStrategy, a software company which recently invested billions of dollars in Bitcoin, which may have caught the attention of Musk. 



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