- Bitcoin jumped 16% to an all-time high of $44,795.20 on Monday.
- The surge higher comes after Tesla disclosed in a SEC filing on Monday that it purchased $1.5 billion of bitcoin.
- Tesla expects to begin accepting bitcoin as a form of payment for its products in the near future.
Bitcoin soared 16% to a record high of $ 44,795.20 after documents filed with the SEC on Monday revealed that Tesla invested $ 1.5 billion in the popular cryptocurrency. Tesla’s shares rose by as much as 2%.
The electric vehicle maker said in its annual 10-k report on Monday that it bought $ 1.5 billion in bitcoins in January and plans to start accepting the cryptocurrency as a form of payment in the near future.
“In January 2021, we updated our investment policy to provide us with more flexibility to further diversify and maximize returns on our cash, which is not necessary to maintain adequate operating liquidity,” says the document.
Tesla is not the first company to convert a portion of its money into bitcoin, with MicroStrategy adopting that policy last year, becoming a de facto bitcoin trading vehicle.
Square also acquired $ 50 million in bitcoins last fall, and PayPal recently opened its services for cryptocurrencies.
The Tesla document went on to say, “We may invest a portion of that money in certain alternative reserve assets, including digital assets, gold bars, gold exchange-traded funds and other assets as specified in the future.”
Another digital asset that caught Musk’s attention in recent days was Dogecoin, a cryptocurrency based on a dog meme. Musk’s tweets supporting Dogecoin last week led to a price more than doubled for the cryptocurrency.
But there are risks associated with buying cryptocurrencies, which are presented in Tesla’s filing with the SEC.
“As intangible assets without centralized emitters or government agencies, digital assets have been, and may be in the future, subject to security breaches, cyber attacks or other malicious activities, as well as human error or computer malfunction that can result in loss or destruction of private keys necessary to access such assets. “
With these risks in mind, Tesla said that when it eventually accepts bitcoin as a payment method for its products, it may or may not settle it on receipt, according to the document.
So what does this move to bitcoin mean for Tesla’s shares?
According to a note from Monday by Wedbush analyst Dan Ives, “this move may give Tesla’s shares more momentum as more investors begin to assess the company’s bitcoin / crypto exposure as part of the overall assessment.”