Today, cryptocurrency markets were rocked by news of Tesla investing in top digital asset, Bitcoin, to the tune of $1.5 billion USD.
Digital asset markets saw an immediate effect, with Bitcoin moving swiftly upwards, breaking through its previous all-time-high of $43,000.
News of this $1.5 billion investment by Tesla broke through a recent annual report filed by the company with the Securities and Exchange Commission (SEC).
“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. 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 long-term.”
Although Tesla may be the largest, and best known name to have invested in Bitcoin to date, it is by no means alone in this decision. We have covered multiple developments over the past few months, as companies from a variety of sectors took similar actions. Highlighting these would be MicroStrategy, and its repeated forays in to the sector.
While news of Tesla investing in Bitcoin is overwhelmingly positive, the good vibes do not end there. In addition to its $1.5 billion investment, Tesla has stated that it will soon begin accepting Bitcoin as a form of payment.
“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.”
Despite functioning as a store of value, and changing the worlds approach to remittance, etc., one of the prevailing ‘knocks’ against Bitcoin is its lack of acceptance by merchants as a form of payment. This endorsement by Tesla is a good step towards changing this aging narrative.
Bitcoin, not Doge.
Elon Musk is a visionary, responsible for some of humankind’s greatest feats in recent years. We have seen his companies' change the way we understand and approach travel in both a terrestrial and extraterrestrial sense. As a result, Elon Musk has developed a worldwide following of adoring fans. What this means is that when Elon Musk and his companies, such as SpaceX and Tesla, make a move, everyone watches closely.
Over the past few years, there have been various occasions in which Elon Musk has discussed digital assets. One in particular which has been mentioned on multiple occasions is Dogecoin. This proof-of-work asset was developed as a joke, and is a fork of a fork. Despite its peculiar beginnings, Doge has somehow managed to build a small following over the years as speculators utilize it as a medium for ‘pump and dumps’.
With digital assets generating a huge amount of interest in recent months, there are scores of new industry participants still learning the ropes. For those finding themselves in this position, an understanding must be made, allowing the differentiation between the aforementioned assets.
It is important to note that when push came to shove, Tesla did not invest in Dogecoin – it invested in Bitcoin.
Asking for Attention
Moving forward, it should be interesting to see if past tweets by the influential Elon Musk, will garner the attention of the SEC.
In the past, Elon Musk was forced to pay a $20 million fine, when he tweeted about taking Tesla private and share prices.
This situation is not as clear cut, however, as Elon Musk has no affiliation with Bitcoin, and the SEC itself has designated the digital asset as NOT being a security. Now that Tesla holds a sizable amount in Bitcoin, more attention will no doubt be paid to such tweets, as they have the potential to swing markets and now have a direct impact on Tesla itself.