The company that belongs to the richest person in the world bought USD 1,500 worth of Bitcoin. Tesla seeks to safeguard its surplus cash in store-of-value assets like Bitcoin.
Tesla bought USD 1.5 billion worth of Bitcoin in January, according to an annual report that they filed with the US Securities and Insurance Commission (SEC). The document, which the SEC recently posted, reflects that the electric car maker plans to accept Bitcoin as a means of payment for its products.
Elon Musk’s company, the world’s richest person, said that they made this acquisition due to an update in their financial policies. Tesla seeks to invest the surplus cash that it owns in store-of-value assets like Bitcoin. They are also looking at index funds for gold and other assets, which they will be reporting on soon.
Similarly, they stated that they could acquire other digital assets or cryptocurrencies as part of their investment strategy. They claim that there could be unfavorable scenarios to liquidate a position in digital assets. However, they consider that their position in Bitcoin is quite liquid, that is, they can sell it whenever they want.
The electric car maker said that its cash balance has risen in most of its revenue areas. That has happened because the production of Tesla units has partially stopped. The state of New York has restricted the company’s operations due to the coronavirus pandemic. Tesla’s largest assembly plants are in precisely that state of the northwest United States.
The company is in great need of investing cash in the research and development of its products. For this reason, they require to use a vehicle that maintains or increases its value over time, such as Bitcoin. The report that they filed with the SEC indicates that they had nearly USD 20 billion in cash as of December 2020.
Elon Musk, the founder and CEO of Tesla, has recently written on Twitter to influence the market for Dogecoin, whose price soared. Meanwhile, the company that he leads is acquiring this important reserve in Bitcoin.
By averaging the price of Bitcoin in January at USD 38,000, it is possible to determine that Tesla bought between 30,000 BTC and 40,000 BTC that month. “In hindsight, it was inevitable,” Musk tweeted as he changed his Twitter biography to include the hashtag #Bitcoin, which he removed days later.
Since then, people have speculated that the company had bought or would be buying Bitcoin. The official document of the report that they filed with the SEC, the regulatory agency for financial activities in the United States, confirms this.
The Bitcoin purchase that Bitcoin Tesla is making seems to be driving a significant increase in the price of Bitcoin (BTC) in the markets. After they said that they would accept the cryptocurrency as payment for their electric cars, its price soared to a new all-time high of around USD 45,000 per unit.
By Alexander Salazar
