US-based major electric car manufacturer Tesla said it invested an aggregate USD 1.50bn in bitcoin (BTC) and expects “to begin accepting bitcoin as a form of payment for our products in the near future.” (Updated at 13:35 UTC: updates throughout the entire text. Updated at 14:03 UTC with liquidation data, comments, and Google Trends data. Updated at 15:37 UTC: updates throughout the entire text.)
In a filing with the US Securities and Exchange Comission, the company said that, in January 2021, it “updated 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.”
According to Tesla, they may acquire and hold digital assets from time to time or long-term. The company said it ended 2020 with USD 19.38bn in cash and cash equivalents.
“We believe our bitcoin holdings are highly liquid. However, digital assets may be subject to volatile market prices, which may be unfavorable at the time when we want or need to liquidate them,” the company said.
As for the accounting, the car manufacturer said that the cost basis of the digital assets will not be adjusted upward for any subsequent increases in their quoted prices on the active exchanges. “Gains (if any) will not be recorded until realized upon sale,” they added.
For 2020, Tesla reported a consolidated profit of USD 862m on about USD 31.5bn in revenues, compared with USD 24.6bn revenues and USD 775m loss in 2019.
Following the news, BTC hit its new all-high of USD 43,878, per Coingecko data. At the time of writing (15:36 UTC), BTC trades at USD 43,560 and is up by more than 15% in a day and 32% in a week. It’s up by 345% in a year. Also, Tesla shares jumped by 3% in the first hours of trading today. As reported, Tesla was one of the two companies from the S&P 500 list that outperformed BTC in 2020.
Meanwhile, in the past four hours, almost USD 713m worth of BTC short positions were liquidated, according to bybt.com data. Also, crypto exchanges such Kraken, Gemini, Binance, and Coinbase reported technical issues as traders rushed on these platforms following Tesla’s news.
Last week, Tesla founder Elon Musk said that BTC is on the verge of getting a broad acceptance by the “conventional finance people.”