It has not gone unnoticed in the crypto world that Elon Musk, CEO and founder of Telsa, had been flirting with Bitcoin and other cryptocurrencies in the past two weeks. On his Twitter account he changed his bio to #Bitcoin and before that to former CEO Dogecoin – in a long running joke with the popular tipping cryptocurrency personified by an image of a Shiba Inu dog.
Then on Monday, February 8th, the flirting turned serious and in a filing to the SEC, the Securities and Exchange Commission, Tesla announced it had purchased $1.5 billion of Bitcoin in a move to provide ‘more flexibility to further diversify and maximize returns on our cash.’ In the same filing, the company announced it would accept bitcoin as payment for its cars.
Dogecoin had already experienced a multi digit growth on the back of this flirting, but on the day of filing, Bitcoin jumped to more than $44,000 and pushed the entire cryptocurrency market cap well over the $1 trillion mark, a barrier it had seemed unlikely to break before Elon’s intervention.
The first piece of news makes sense on the back of accounts reported for Tesla at the end of 2020 showing the company had record cash and cash equivalent reserves of $19billion – the company would have increased the dollar amount overnight in this announcement.
Likewise, the news that Tesla will accept bitcoin for payment for its landmark cars is another first, traditionally Tesla prefers to sell its cars direct but previously only for fiat. In the past luxury dealers have resold Teslas for bitcoin, notably in 2013 a luxury dealer in California sold one for 91.4 bitcoins or $103,000 at the time.
Other luxury autodealers have accepted bitcoin for cars, including BMW, while E-Z car rentals accepts bitcoin for car rentals stating faster transaction speeds and Bitcar offers fractional ownership of luxury cars for crypto.
As a result of the news, Tesla shares also rose 2%.
Back in 2018, Elon had been fined by the SEC for tweeting that he would take his company public. It cost him $20 million personally, $20 million for the company and he was forced to resign as chairman.