Bitcoin Surges As Tesla Buys $1.5bn Of Digital Currency

bitcoin crypto

Elon Musk is well known for his backing of bitcoin and other digital currencies, as Tesla confirms it will soon accept digital payments for new cars

The worlds most valuable car maker Telsa has helped pushed the value of bitcoin even more higher on Monday.

Tesla disclosed in its annual financial results filed with the US Securities and Exchange Commission (SEC), that it has purchased $1.5bn (£1.1bn) in bitcoin.

And the car maker said that it may soon accept payment in the cryptocurrency for new electric cars. CEO Elon Musk has previously publicly endorsed bitcoin, and this latest news prompted the price of the digital currency to jump to $43,765 per coin.

Tesla and SpaceX chief executive Elon Musk. Image credit: SpaceX
Tesla and SpaceX chief executive Elon Musk. Image credit: SpaceX

Bitcoin endorsement

In its regulatory filing, Tesla, said that it had “updated our investment policy to provide us with more flexibility to further diversify and maximize returns” to allow it to invest cash reserve in “alternative reserve assets including digital assets”.

It said that since the decision was approved by its audit committee it had “invested an aggregate $1.50bn in bitcoin under this policy and may acquire and hold digital assets from time to time or long-term”.

“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, which we may or may not liquidate upon receipt,” the company added.

Last month Elon Musk became the world’s richest man, overtaking Amazon’s founder and CEO Jeff Bezos and Microsoft’s cofounder and former CEO Bill Gates.

Musk clout

Musk’s position in the world’s richest man rankings had changed, thanks to the soaring share price of Tesla, with the electric car maker currently valued at a staggering $882 billion, making it the world’s most valuable car manufacturer.

To put that into context, rival car makers such as Toyota, is only valued at $212 billion, and Volkswagen is valued at a mere $110 billion as of Monday 8 February 2021.

Musk has tweeted his support for both bitcoin and dogecoin digital currencies, and when Musk announced last week that he was a “supporter” of the cryptocurrency, the price of bitcoin soared.

The price of Dogecoin rose 50 percent after Musk endorsed it.

However regulatory authorities remain wary of digital currencies, and last year the Bank of England governor Andrew Bailey warned against Bitcoin’s use as a payment method.

For Tesla however, it said in its filing that its bitcoin investment allows it to diversify and maximize its returns on cash.

According to the filing, Tesla ended 2020 with $19.38 billion in cash and cash equivalents.