Tesla Invests $1.5 Billion in Bitcoin

Tesla, Elon Musk’s electric car company, has invested a total of $1.5 billion in Bitcoin and expects to accept the cryptocurrency as payment in the “near future.” 

The company revealed the investment and its plans on Monday in an annual financial report to the Securities and Exchange Commission. The company also said it may acquire and hold digital assets from “time to time or long-term.” The price of Bitcoin rose by around 7 percent shortly after the news broke, and at the time of writing sits at $42,660.

Notably, the disclosures came in the section of the filing that cover risks to the company that investors might want to know about. Besides having Bitcoin on the books, the filing says that union activity is a risk to its business, noting that it has been subject to unfair labor practices complaints in the past and may be again. 

Tesla’s SEC filing explains the well known risks that come with investing in cryptocurrencies, particularly price volatility. According to the filing, Tesla considers Bitcoin an “indefinite-lived intangible asset,” which means it must be regularly appraised, and if it decreases in value, Tesla must pay what are known as impairment charges. On the other hand, Tesla can’t adjust the value of its Bitcoin on the books upwards until it’s actually sold.

The prices of digital assets have been in the past and may continue to be highly volatile, including as a result of various associated risks and uncertainties. For example, the prevalence of such assets is a relatively recent trend, and their long-term adoption by investors, consumers and businesses is unpredictable. Moreover, their lack of a physical form, their reliance on technology for their creation, existence and transactional validation and their decentralization may subject their integrity to the threat of malicious attacks and technological obsolescence. Finally, the extent to which securities laws or other regulations apply or may apply in the future to such assets is unclear and may change in the future. If we hold digital assets and their values decrease relative to our purchase prices, our financial condition may be harmed.

Musk has spent the last few months hyping crypto currencies on Twitter. In early February, he added “#Bitcoin” to his Twitter bio (and then removed it). In the past week, he’s been tweeting about Dogecoin, sharing cringeworthy memes joking about him hyping the joke cryptocurrency, which has surged in value as Musk and other celebrities encouraged their followers to invest in it.

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