Elon Musk’s Tesla Buys $1.5bn of Bitcoin Causing Currency To Spike
The news caused the price of Bitcoin to jump 14% to $43,968, 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 up Bitcoin and other cryptocurrencies, including Dogecoin, which jumped 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.
“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.
In October, Bank of England governor Andrew Bailey cautioned over Bitcoin’s use as a payment method.
“I have to be honest, it is hard to see that Bitcoin has what we tend to call intrinsic value,” he said. “It may have extrinsic value in the sense that people want it.”
Mr Bailey added that he was “very nervous” about people using Bitcoin for payments, pointing out that investors should realise its price was extremely volatile.