Electric car maker Tesla has invested $1.5 billion in Bitcoin, the company reported Monday in its investor relations filing. The company stated its purpose is to diversify and maximize returns on its cash holdings.
It is uncommon for businesses to use digital currency as an investment asset, reported USA Today. Tesla stated in its filing that digital assets are associated with risks and uncertainties due in part to price volatility. The filing mentions as risk factors that digital assets are new, that they lack government backing and are technologically vulnerable.
— Reuters (@Reuters) February 8, 2021
Tesla also announced that it expects to be accepting Bitcoin as payment for its vehicles in the near future. Acceptance would be initially be limited. While bitcoin is accepted by many retailers, its use to date is limited, according to The New York Times.
The report uses Overstock as an example, which received $30-50,000 per week in Bitcoin in the first three quarters of 2020. This accounted for less than 0.1% of its sales. Overstock has accepted Bitcoin since 2014. (RELATED: Elon Musk’s Tesla Made Record Deliveries In 2020 Despite Global Car Demand Slump)
The use of Bitcoin for retail transactions purposes is slowly expanding, with Microsoft, AT&T and Home Depot announcing acceptance of the digital currency, the Times reported. As retail use expands, demand for Bitcoin for transactions purposes increases, balancing out speculative demand for the digital currency. With its announcement of Bitcoin acceptance for vehicle purchases, Tesla will add demand for Bitcoin to the transactions.
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