On Monday, Tesla made a path-breaking announcement about buying Bitcoin worth $1.5 million. Tesla, in their SEC filing, said that they bought Bitcoin for diversification & maximum return on their cash. In their SEC filings, Tesla also announced that they will start accepting payment in Bitcoin for their products & services. Being the first among automakers globally to accept payments in Bitcoin, Tesla proved their intention with their purchase of $1.5 billion worth of Bitcoins.
Is Tesla’s Investment in Bitcoin a Considerable Amount for Tesla?
As per the latest filing by Tesla, by the end of 2020, Tesla had cash & cash equivalent of $19 billion. It means that an investment worth $1.5 billion in Bitcoin is a considerable sum of money for Tesla.
The timing of Tesla’s purchase of Bitcoin may also raise some questions about Musk’s behavior on Twitter. He has been tweeting in support of Bitcoin & Dogecoin recently, and it has led to price gain in both of these cryptocurrencies. Many people started buying Dogecoins & Bitcoin after Musk’s encouraging tweets about them.
It all started almost two weeks ago when Musk added “#bitcoin” to his Twitter bio. It was a significant move by Musk as the prices of Bitcoin jumped by almost 20%. Later on, in his interview on Clubhouse, an upcoming social media chat website, while talking about Bitcoin, Musk said:
“I do at this point think bitcoin is a good thing, and I am a supporter of bitcoin.”
Bitcoin Touches an All-Time High
As soon as the news about Tesla’s Bitcoin purchase became public, the price of Bitcoin started moving upward rapidly. Within no time, it crossed $44000. The news about the Bitcoin purchase also affected Tesla’s shares. Its prices were up in premarket trading by more than 2.5%.
It is important to note here that in 2018, Musk had to face charges for fraud brought on him by the SEC for tweeting about taking Tesla private. Musk has to pay a fine of $20 million for his tweets and also had to give up on his role as Tesla’s chairman.
