Tesla has bought $1.5 billion in bitcoin and will start accepting the cryptocurrency as payment, according to a Security and Exchange Commision (SEC) filing on Monday.
The company said it purchased the bitcoin for “more flexibility to further diversify and maximize returns on our cash.” The news makes Tesla the first automaker to accept the cryptocurrency, according to CNBC.
Carson Block, founder of Muddy Waters Research, doubts any federal interference in CEO Elon Musk’s plans.“The SEC just does not have a record of success against Elon Musk so I expect any effort in that direction to go, it would just be a dead end basically.” Dan Ives, managing director of equity research at Wedbush, sees upside for the stock. “This is Tesla and Musk diving into the deep end of the pool on crypto and it’s something that’s been rumored for a while, and ultimately now this is really them putting substance behind his view. I think it’s something the Street will have a differing view of, but ultimately … this is definitely going to be viewed as a positive for the stock.”
Mike Novogratz, founder of Galaxy Digital, sees this as a pioneering move that other companies will adopt. “Every company should be looking at how to accept digital currencies, digital payments as part of their business scheme. It’s not that difficult. It’s what customers want, it’s where the world is moving. And so that I think he’s getting ahead of the curve, and I think you’re going to see every company look to figure out how they could, from McDonald’s to Bojangles, you name it.”
Mohamed El-Erian, chief economic advisor at Allianz, said this should give bitcoin a boost. “What did Tesla tell you? Two things. One is that this will be a form of payment. And two is that this is an investment vehicle. So those are two powerful endorsements for the notion, I want to stress the notion, that bitcoins are a currency, a money, because after all money is a store of value. Money is a form of payments. So yes, that will build further momentum. As to the reaction, it’s going to be all over the place. Some will see it as visionary, others will say ‘wait a minute, if I want to invest in bitcoin, I’ll do it directly, I don’t need Tesla to do it for me.’ … So you’re going to see a whole range of reactions but for bitcoin holders, [Monday’s] good news.”
ENTERTAINMENT EDITOR: CONNOR KMIECIK
PHOTO CREDITS: THE TELEGRAPH