Tesla Inc

TSLA 131%

said Monday that it bought $ 1.5 billion bitcoin, a disclosure following the chief executive

Elon Musk

Promote the cryptocurrency and other digital currency alternatives on Twitter

The electric vehicle company also expects to soon accept Bitcoin as a means of payment for its products

Bitcoin

Prices rose more than 10% after the announcement, according to data from cryptocurrency research and the news site CoinDesk

Tesla announced its Bitcoin purchase in its latest annual report, saying the move is aimed at “diversifying and maximizing the returns on our cash that are not required to maintain adequate operational liquidity,” said a board member. The committee had approved changes to the company’s investment rules and added that it could, among other things, invest cash in gold bars and exchange-traded gold funds

The Bitcoin purchase, likely among the largest of any public company, comes after a rally in 2020 as the price more than quadruples Tesla joins a handful of other companies that have disclosed Bitcoin holdings to software developers

MicroStrategy Inc

acquired around $ 425 million worth of Bitcoin last summer

Michael Saylor,

has become an outspoken proponent

Companies that keep Bitcoin in their treasury are exposed to accounting risk: Since Bitcoin and other digital assets are considered “intangible assets with indefinite useful lives” rather than currencies, their value drops below what the company paid for them – even temporarily one – can force a company to write off and depreciate in value MicroStrategy posted a net loss in the third quarter of 2020 as Bitcoin price fell temporarily in September

Tesla said it would analyze its holdings in the cryptocurrency quarterly to determine if bitcoin price depreciation is warranted “said the company

Sharp changes in the valuation of digital currency could be the reason companies have acquired cryptocurrency worth millions instead of billions of dollars

Michel Rauch,

Founder of Luxembourg-based digital asset consultancy Paradigma Sarl: “It’s definitely a higher risk, but a bigger reward”

Bitcoin was recently at 43 on Monday602 USD traded68, according to CoinDesk The average price was 34$ 730 in January12 and is currently more than eight times higher than Bitcoin’s 2020 low of just under 5$ 000

Mr Musk has shown a growing interest in bitcoin in recent years after tweeting in 2018 that the only cryptocurrency he owned was a quarter of a bitcoin given to him by a friend – which is more than 10 todayWould be worth $ 000 Um Jan 29 The Tesla boss changed his Twitter bio to “#bitcoin” which made the prices higher before this link was removed

“I think Bitcoin is about to see widespread adoption by the conventional financiers,” he said on the Clubhouse social networking app last week these things can really move the market ”

Tesla did not respond to a request for comment, the company said in its report that it updated its investment policy in January but did not disclose the exact timing of its board decision or its Bitcoin purchase

“He’s already telegraphed it to the market,” he said

Meltem Demirors,

Chief Strategy Officer of London-based wealth management firm CoinShares, referring to Mr. Musk mentions Bitcoin in his Twitter bio, “One of the biggest companies in the world that does this – I think it opens the floodgates”

Recently, Mr. Musk’s tweets about Dogecoin, a cryptocurrency that started as a hoax in 2013, helped raise the price of that virtual currency

Tesla struggled to hold cash while vehicle production ramped up, but its shares rose roughly 480% in the fiscal year ended Friday as investors pile up in electric vehicle manufacturers and the company reported a string of quarterly earnings that Tesla took advantage of Increase by selling billions of dollars in new stock, building its cash position. The company’s cash holdings were around $ 19 billion at the end of last year, down from around $ 6 billion at the end of 2019

Mr Musk’s tweets were subject to regulatory scrutiny, including from the Securities and Exchange Commission of a 2018 post where the CEO said he had secured funding to privatize Tesla, including Mr Musk and the SEC later struck a deal , which the company is required to sign any written statements it has deemed material since then, he has mocked the regulator on Twitter

It is unlikely that the SEC will challenge Mr Musk over his Bitcoin tweets, said

John Coffee Jr,

A Columbia University law professor who specializes in securities law, particularly after a federal judge reprimanded the commission for attempting to despise the 2019 CEO, Tesla didn’t respond to a request for comment on whether Mr. Musk had obtained approval for his bitcoin comment

Mr Musk’s Online Comments Can Move Markets After Promoting Online Shopping Site

Etsy Inc

in January, the stock rose more than 8% in the Open

CD Projekt SA,

The maker of the troubled Cyberpunk 2077 game rose more than 15% after Mr. Musk praised the game Both stocks later pulled back. Last year, Mr Musk tweeted that he thought Tesla’s stock price was too high.The market agreed and the stock fell before rebounding

An affinity for Bitcoin seems to be for Mr. Musk Resisting Government Coercion Last year he fought local authorities in California who were commanding his lonely US The car plant closed as part of broader measures to contain the pandemic.Mr Musk reopened the facility after a few weeks and dared authorities to arrest him. They didn’t
Part of the appeal of Bitcoin to some holders is that it is not distributed or controlled by any government or nation, unlike opening a bank account to store dollars, euros, or yen, there are none for opening a Bitcoin account Identifying Information Required Bitcoin is virtually anonymous and law enforcement cannot freeze a Bitcoin account like a bank account

Payment company

Square Inc,

which Bitcoin proponents shares

Jack Dorsey

as CEO

Twitter Inc,

acquired approximately $ 50 million for its Massachusetts Mutual Life Insurance Co fund in October acquired a value of 100 million in December USD to keep it on his general investment account

Companies may have become more optimistic about Bitcoin after the March 2020 sell-off, when it rebounded faster than the broader stock market

Joel Kruger,

a currency strategist at LMAX Group

The extra wrinkle at Tesla is its plan to accept bitcoin from customers.Few companies accept bitcoin directly as payment

Surplus Com Inc

Among the few who do, some large companies experimented with Bitcoin payments in 2014 and 2015, such as:

Dell Technologies Inc

and

Expedia Group Inc,

but most later dropped it for lack of use

While Tesla’s move would be high-profile, more substantial development is expected later this year, when

PayPal Holdings Inc

plans to enable its customers to use their bitcoin holdings for payments

Mr Musk’s connections with the financial services industry date back to the 1990s when he invested most of the $ 22 million he made from selling an internet business in a new startup, Xecom, which became PayPal

EBay Inc

bought PayPal for $ 1.4 billion in 2002

As the largest shareholder, a 31-year-old Mr. Musk has raised more than $ 100 million with the money he founded Tesla and Space Exploration Technologies Corp., the rocket company he also runs, as well as the solar cell company SolarCity, now part of Tesla

Published in the print edition of 9 February 2021 as ‘Tesla makes big bet in Bitcoin’

Bitcoin Value, Bitcoin Price, BTC

World News – FI – Tesla buys USD 1.5 billion in Bitcoin

Source: https://www.wsj.com/articles/tesla-buys-1-5-billion-in-bitcoin-11612791688