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Tesla made wades when it announced that it invested $1.5 billion in Bitcoin on Monday. The electric carmaker’s announcement proved to be a market-moving one as it pushed BTC to a new all-time high and generated hundreds of millions of dollars in paper gains for the company
After Tesla’s BTC investment was made public, Bitcoin’s price rose relentlessly until it topped $48,000 by late Monday, according to Coindesk. After establishing its new record, the crypto eventually settled down to around $45,000 by early Tuesday.
Tesla’s Bitcoin bet is paying off so far. With the crypto rising 18 percent in just 24 hours, the electric carmaker’s crypto investment has already generated around $270 million in paper gain.
The company revealed its crypto investment via its latest Form 10-K filing for the fiscal year ended December 31, 2020, with the U.S. Securities and Exchange Commission, according to Cointelegraph. Tesla’s position in the cryptocurrency represents a significant percentage of the firm’s net cash.
“According to the most recent 10K filing, @Tesla had cash & equivalents of $19.4 billion (gross), or $98 billion (net of debt and finance leases),” Bitwise researcher David Lawant tweeted. “Using these figures as a reference, $1.5 billion in #Bitcoin represents an allocation of 7.7% on gross cash or 15.1% on net cash.”
The company’s investment is part of its new investment policy designed to diversify its investment and maximize returns, allowing the firm to invest in digital assets, gold bullion, and gold exchange-traded funds as alternative reserve assets. Tesla also revealed that it plans to accept as payment.
“We invested an aggregate $1.50 billion in bitcoin under this policy and may acquire and hold digital assets from time to time or long-term,” Tesla said in its filing. “Moreover, we expect to begin accepting bitcoin as a form of payment for our products in the near future, subject to applicable laws and initially on a limited basis, which we may or may not liquidate upon receipt.”
Tesla’s entry into crypto could signal increasing adoption of digital assets among big brands. “We think this is just the start to a much wider adoption from household institutional names, finally ready to make the crossover into the crypto space,” LMAX crypto exchange strategist Joel Kruger said, according to Coindesk.
