Tesla said on Monday it had invested about US$1.5-billion (R22.4-billion) in bitcoin and expected to begin accepting payment for its cars and other products with it in the near future, prompting a more than 13% jump in the cryptocurrency to a new record high.
Analysts said the move by one of the world’s best-known companies was liable to prove a game changer for bitcoin.
A well-known supporter of bitcoin, CEO Elon Musk has been weighing in regularly over the past week to a frenzy in retail investment, also driving up shares in meme-based digital currency dogecoin and shares of US videogame chain GameStop.
Musk said a week ago that bitcoin was “on the verge” of being more widely accepted among investors and in December asked if it was possible to do large transactions in the currency.
“I think we will see an acceleration of companies looking to allocate to bitcoin now that Tesla has made the first move,” said Eric Turner, vice president of market intelligence at cryptocurrency research and data firm Messari.
“One of the largest companies in the world now owns bitcoin and by extension, every investor that owns Tesla (or even just an S&P 500 fund) has exposure to it as well.”
Rollercoaster ride
Bitcoin, which has set new record highs in recent months after a rollercoaster ride over the past decade, has also drawn support from major financial institutions this year. The world’s biggest money manager, Blackrock, recently changed a handful of investment mandates to allow some of its funds to invest in the currency.
Central banks remain sceptical of digital currencies, but analysts say the more real world uses appear for bitcoin, the more attractive it will prove as a long term store of value.
Tesla said in a filing the decision was part of its broad investment policy as a company and was aimed at diversifying and maximizing its returns on cash.
It said it had invested an aggregate $1.5-billion in bitcoin under the changed policy and could “acquire and hold digital assets from time to time or long-term”. — Reported by Subrat Patnaik, Thyagaraju Adinarayan and Anna Irrera, (c) 2021 Reuters