Elon Musk, the owner of Tesla has bought $1.5 billion worth of bitcoins and said it would accept it as a form of payment for its cars in the near future — adding to the buzz around both carmaker and cryptocurrency. Making it the biggest investment by a mainstream corporation into the most popular cryptocurrency, the rate of bitcoin skyrocketed to an all-time high, breaching the $44,000-mark for the first time. Tesla made it clear in its statement filed with its regulator the Securities and Exchange Commission that it sees bitcoin as a chance to diversify its cash and cash-equivalent holdings.
Now the Question arises why Tesla bid high on Bitcoins?
Tesla CEO Elon Musk has been an outspoken supporter of cryptocurrencies including bitcoin. In January, the tech billionaire added the hashtag #bitcoin to his Twitter bio, which briefly pushed up the widely held cryptocurrency’s price by as much as 20%. Musk later said via the audio-based social media app Clubhouse that he regretted moving the price. Two days later he regretted not investing in cryptocurrency sooner.
The price of bitcoin has jumped nearly 67% this year since Jan. 1, indicating a lucrative return so far on the company’s $1.5 billion investment.
Tesla is not the first company to add bitcoin to its balance sheet. MicroStrategy, a U.S. software company, bought $250 million worth of bitcoins in August, which are now valued at about $3.1 billion. The bet has helped to push the share price of the Nasdaq-listed company more than 800% higher.
Among the major firms to accept bitcoin as payments are Pizza Hut, Subway, which accept bitcoin as payments in some of their branches in the US and Venezuela. Notably, Microsoft AT&T was the first major US company to provide cryptocurrency payment option to its customers.
The Wall Street Journal notes that, the Tesla CEO invested most of the $22 million he earned from the sale of an internet business into a new startup, X.com, which became PayPal Holdings PYPL, -0.36% about 20 years ago.
PayPal currently is among the vanguard of bitcoin revolution. PayPal back in November opened up its cryptocurrency platform to all U.S. customers after conducting a more narrow rollout. Moreover, several high-profile Wall Street investors, including Stanley Druckenmiller and Paul Tudor Jones, have embraced bitcoin.