Tesla Inc Buys $1.5 Billion in Bitcoin

Posted on 02/08/2021

Tesla, Inc. announced it has bought $1.5 billion worth of bitcoin. In a filing with the Securities and Exchange Commission (SEC), Tesla said it bought the bitcoin for “more flexibility to further diversify and maximize returns on our cash.”

Tesla also said it will start accepting payments in bitcoin in exchange for its products “subject to applicable laws and initially on a limited basis.”

Corporate CFOs are looking to diversify their treasury holdings. Tesla’s move into bitcoin represents an investment of a significant percentage of its cash in the investment. Tesla had more than US$ 19 billion in cash and cash equivalents on hand at the end of 2020, according to its most recent filing. In its SEC filing, Tesla warned investors of the volatility of bitcoin’s price.

Bitcoin prices surged to new highs Monday following Tesla’s announcement, reaching a price of at least US$ 44,200. Tesla shares were up more than 2% Monday morning.

On December 21, 2020, Tysons Corner, Virginia-based MicroStrategy Incorporated (Nasdaq: MSTR), a business intelligence company, announced that it had purchased an additional approximately 29,646 bitcoins for approximately US$ 650 million in cash in accordance with its Treasury Reserve Policy, at an average price of approximately $21,925 per bitcoin, inclusive of fees and expenses. As of December 21, 2020, MicroStrategy holds an aggregate of approximately 70,470 bitcoins, which were acquired at an aggregate purchase price of approximately US$ 1.125 billion and an average purchase price of approximately US$ 15,964 per bitcoin, inclusive of fees and expenses. At 12:00 midnight on December 21, 2020, the market price of bitcoin reported on Coinbase was approximately US$ 23,910 per bitcoin. In the nine months ending on September 30, 2020, MicroStrategy raked in US$ 349,416,000 in revenue.

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