Crypto for cars: Musk doubles down on digital currencies, as Tesla invests $1.5 billion in Bitcoin

Tesla is set to start accepting payment in Bitcoin, as billionaire founder Elon Musk bets big on digital currencies.

Stephanie Palmer-Derrien 09 February, 2021

Tesla is set to start accepting payment in Bitcoin, as billionaire founder Elon Musk bets big on digital currencies.

The US$800 billion electric vehicle tech behemoth has invested US$1.5 billion ($1.95 billion) into the cryptocurrency, representing about 10% of Tesla’s total cash holdings.

In its annual report filing with the US Securities and Exchange Commission (SEC), Tesla confirmed it has made the investment, and “may acquire and hold digital assets from time to time or long-term”.

The move follows an update to the tech company’s investment policy, which will see it invest in alternative assets, such as gold bullion and gold exchange-traded funds, in order to diversify and maximise returns on cash.

“Moreover, we expect to begin accepting Bitcoin as a form of payment for our products in the near future,” the filing said.

Tesla “may or may not” liquidate any Bitcoin payments upon receipt, it added.

The filing highlighted the investment in cryptocurrency as a potential risk factor to the business, pointing to the volatility of the price of digital assets, the fact that the trend is relatively new, and the unpredictability of long-term adoption by consumers, investors and businesses.

It also noted that without centralised issuers or governing bodies, Bitcoin could be vulnerable to security breaches. And, the reliance on technology for their very existence “may subject their integrity to the threat of malicious attacks and technological obsolescence”.

At the same time, it is also unclear what kind of regulations will apply to cryptocurrencies in the future.

The price of Bitcoin has been skyrocketing for the past few months, having leapt from the US$10,500 ($13,600) mark in October to a record high of more than US$40,000 ($51,900) in January.

Tesla’s announcement saw the price spike by more than 16% within 24 hours, hitting a new all-time peak of almost $45,000 ($58,400).

Musk himself has long been a backer of Bitcoin and other digital currencies, and some analysts believe this could be a catalyst in bringing crypto into the mainstream.

The eccentric billionaire — and newly minted richest man in the world — has also been driving a bizarre surge in meme-based cryptocurrency Dogecoin.

After a string of tweets from Musk, Dogecoin, which was originally launched in 2013 as a joke, saw its valuation increase from less than US$0.05 to an all-time high of — wait for it — just shy of US$0.09.