Tesla has bought $1.5 billion worth of bitcoin, with the electric automaker revealing plans to start accepting the cryptocurrency as payment on its cars and SUVs. The news follows several weeks of Elon Musk promoting cryptocurrency on his Twitter, with the Tesla CEO hyping up bitcoin, Dogecoin, and others in the marketplace.
Cryptocurrencies vary in how they’re organized, though are typically generated – or “mined” – by high-performance processors and GPUs. One particular difference across types can be whether artificial scarcity is a factor: bitcoin, for example, is limited to 21 million. Dogecoin, which was created in 2013, currently has no hard cap on the total supply.
Many holders of bitcoin, Dogecoin, and other such currencies don’t go to the trouble of mining them themselves, however. Instead there’s a thriving exchange of the cryptocurrencies, and it’s that which Tesla took advantage of earlier this year. In a filing with the SEC, it confirmed that under a new investment policy updated at the start of 2021 it broadened the ways in which it invests cash holdings.
Tesla, the filing says, “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. 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.”
For the moment, Tesla plans to keep hold of its bitcoin stash. “As we currently intend to hold these assets long-term,” the filing adds in reference to impairment charges which could be applied until it actually sells off the holding, and pointing gout that “these charges may negatively impact our profitability in the periods in which such impairments occur even if the overall market values of these assets increase.”
Potentially sparking controversy, Tesla CEO Elon Musk has been increasingly enthusiastic about several such currencies on his Twitter account recently. Over the past weekend, for example, he posted a Dogecoin instructional video explaining how it works. Earlier in February, he tweeted that “Dogecoin is the people’s crypto” along with several memes.
Musk’s involvement has been credited for helping drive the value of Dogecoin up recently. Although individual coins are still worth less than $0.02 apiece at time of publication, that’s a rise of almost 30-percent today. Only a month ago, one coin was worth just $0.0068.
Bitcoin, too, has surged since Musk’s promotion. A single coin is up 15-percent today, to $44,900.
The decision to accept cryptocurrency as payment for Tesla vehicles would make the automaker the first to do so. Other industries have experimented with such options, though the historic volatility os such currencies compared to more traditional versions have since discouraged some.