The company revealed that its purpose for this investment was an “update in investment policy to provide more flexibility to further diversify and maximize return of cash”.
This development came alive days after CEO Elon Musk updated the #Bitcoin on his Twitter bio which was later taken down days after, but kept on his tweets about Bitcoin and other alternative cryptocurrency including Dogecoin which also had a rise of over 50% as of February 4th 2021 when Musk tweeted “Dogecoin is the people’s crypto”.
Major Updates
- Tesla, the electronic vehicle company also stated “it would soon start accepting Bitcoin as Payment method for their products in the nearest future”.
- Tesla also stated that its board committee had approved these changes to the company rules on investments.
- The company may also invest cash in gold bullion, gold exchange-traded funds as well as various forms of digital assets.
The price of bitcoin went up after Musk said in an interview which was carried on Clubhouse, that he was a supporter of the cryptocurrency.
He said “I do think at this point bitcoin is a good thing,” he also said “I am a supporter of bitcoin, Like I said, I was late to the party, but I am a supporter of bitcoin. And I think, bitcoin is really on the verge of getting broad acceptance by conventional finance people.”
Musk also announced on Monday that he had pledged a sum of $100m to a fund to develop technology that removes carbon dioxide from the atmosphere or oceans.and he said “Bitcoin has been criticised by environmentalists because it generates CO2 through the sheer amount of computing power it uses”.
Since the approval was done by the audit committee, the investment of Tesla under this policy may acquire digital assets for a long term or from time to time as it would account for its bitcoin holdings, but has also warned that its exposure to bitcoin could make its financial reports more volatile.
Tesla will analyze its holdings in the cryptocurrency quarterly to see whether impairments are warranted based on bitcoin prices. This move by Tesla, further gives the industry validation and shows crypto's resiliency as an asset class.
It says in the report that the investment of Tesla in Bitcoin gives a representation of about 8% of the $19.4 billion Tesla holds in liquid assets and cash.
Analysts Dan Ives, at Wedbush Securities, said Tesla’s embrace of cryptocurrency was a “potential game changing move for the use of bitcoin from a transactional perspective”.
The price of Bitcoin has hereby been skyrocketed to about nearly $45,000 as at just the morning of the announcement as the price of Bitcoin has been increasing and also the demand from buyers has also increased.
