Elon Musk's Tesla reveals $1.5 billion Bitcoin holding | finder.com

Elon Musk’s Tesla reveals $1.5 billion Bitcoin holding

Posted: 8 February 2021 9:55 am
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The electric car-maker’s SEC filing shows it has bought up to $1.5 billion of the leading cryptocurrency in January, and may be investing in more.

The price of Bitcoin has surged to record highs today after news that Tesla, the electric automaker founded by Elon Musk, disclosed holdings of up to $1.5 billion in the popular digital currency. Bitcoin rocketed over 13% to an all-time high of more than $44,000 on Monday, as Tesla also announced plans to begin accepting Bitcoin payments, as well as future cryptocurrency investments.

Was this expected?

In late January, Musk changed his Twitter bio to “#bitcoin”, and recently speculated that digital currencies such as bitcoin would likely be “the future currency of Earth.” He has also spent weeks tweeting about the joke cryptocurrency Dogecoin, which has enjoyed a huge price surge as a result.

However, this is still something of a surprise, and Tesla is far-and-away the biggest company to announce it has acquired cryptocurrency.

What does this mean for Tesla shareholders?

While Tesla shares were trading slightly higher on the news, the long-term implication for the company and its investors remains to be seen. Fans of cryptocurrency will likely appreciate the company’s attempts to diversify, while more conservative investors may see it as an overly-risky venture.

It means Tesla stock will potentially be exposed to the price of Bitcoin, which has traditionally experienced significant volatility. However, the bitcoin purchase represented only 7.7% of Tesla’s year-end cash, and around 0.18% of its market cap, which makes it a relative drop in the ocean.

But it does raise question marks over whether Musk’s recent social media activity could be considered market manipulation, and also exposes Tesla to potential security breaches or cyberattacks targeting the company’s Bitcoin holdings.

Tesla said the investment would “provide us with more flexibility to further diversify and maximize returns on our cash that is not required to maintain adequate operating liquidity.”

What does this mean for Bitcoin?

The price of Bitcoin has already enjoyed huge growth over the last few months, but this news could push prices even further as retail and institutional investors flock in. While funds such as MicroStrategy and Grayscale have announced huge cryptocurrency investments, this is the first time a major company has followed suit, which may help legitimise Bitcoin in the eyes of many, and reinforce its viability as a serious investment.

Interested in cryptocurrency? Learn more about the basics with our beginner’s guide to Bitcoin, dive deeper by learning about Ethereum and see what blockchain can do with our simple guide to DeFi.

Disclaimer: Cryptocurrencies are speculative, complex and involve significant risks – they are highly volatile and sensitive to secondary activity. Performance is unpredictable and past performance is no guarantee of future performance. Consider your own circumstances, and obtain your own advice, before relying on this information. You should also verify the nature of any product or service (including its legal status and relevant regulatory requirements) and consult the relevant Regulators' websites before making any decision. Finder, or the author, may have holdings in the cryptocurrencies discussed.

Disclosure: The author owns a range of cryptocurrencies at the time of writing

Disclaimer: This information should not be interpreted as an endorsement of cryptocurrency or any specific provider, service or offering. It is not a recommendation to trade. Cryptocurrencies are speculative, complex and involve significant risks – they are highly volatile and sensitive to secondary activity. Performance is unpredictable and past performance is no guarantee of future performance. Consider your own circumstances, and obtain your own advice, before relying on this information. You should also verify the nature of any product or service (including its legal status and relevant regulatory requirements) and consult the relevant Regulators' websites before making any decision. Finder, or the author, may have holdings in the cryptocurrencies discussed.

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