Bitcoin has soared to a record high price after Elon Musk’s Tesla announced it had bought $1.9 billion of the cryptocurrency, and that it will soon accept it as payment.
Buried in Tesla’s 2020 annual report was an announcement that the tech firm had bought $US1.5 billion of bitcoin, equally nearly 8 per cent of the company’s total reserves.
It’s another major milestone for the cryptocurrency’s mainstream adoption, and saw the price of bitcoin rise by about 13 percent to hit a record high of $60,048.
This is a big increase from late last year, when the price of one bitcoin hit $24,320.
At the time, there was widespread hope that bitcoin would reach $US20,000 by the end of 2020.
It has now risen by more than this amount in just the first six weeks of 2021, hitting $US46,074 as of Tuesday morning.
Tesla said the acquisition of bitcoin is part of its strategy to give the company “more flexibility to further diversify and maximise returns on our cash that is not required to maintain adequate operating liquidity”.
“We invested an aggregate $US1.50 billion in bitcoin under this policy and may acquire and hold digital assets from time to time or long-term,” the company said in the SEC filing.
Tesla did not make a big song and dance of the purchase, burying the information deep in its annual report under a nondescript headline.
The big reveal even led to some cryptocurrency exchanges experiencing technical issues due to an influx in interest.
The company also announced that it would soon accept bitcoin as payment for its range of vehicles.
“We expect to be accepting bitcoin as a form of payment for our products in the near future, subject to applicable laws and initially on a limited basis, which we may or may not liquidate upon receipt,” Tesla’s statement said.
In the announcement, Tesla did admit that cryptocurrencies are still “highly volatile”.
Musk, the founder and CEO of Tesla, has shown significant support for bitcoin and other cryptocurrencies recently.
For a short-time the entrepreneur’s Twitter bio simply read “#bitcoin”, and he told a Clubhouse meeting that “bitcoin is a good thing” and he should’ve bought into it nearly a decade ago.
Just last week Musk said that bitcoin was “on the verge” of being more widely accepted in the mainstream.
Musk also recently drove up the price of the meme-based cryptocurrency Dogecoin with a series of tweets in support of it. Musk’s tweets earlier this week led to the price of Dogecoin jumping by more than 50 per cent in just a day.
It was a good 2020 for Musk, with a meteoric rise for Tesla lifting him to the title of the world’s richest person. Musk is now worth an estimated $250 billion, taking over from Amazon’s Jeff Bezos as the world’s wealthiest individual.
A number of other major tech firms have announced similar plans to start accepting cryptocurrencies as payment in recent months.
Late last year, PayPal confirmed it would soon let its users buy, sell and hold bitcoin and other cryptocurrencies such as Ethereum, saying that widespread adoption of the technology was “inevitable”.
Tesla’s announcement has also one-upped payments tech firm Square, which in October last year bought $70 million of bitcoin on the bet it will eventually be the “ubiquitous currency”.
Cryptocurrency’s journey to the mainstream continues to pick up steam. A survey last year found that nearly half of the respondents trusted bitcoin more than the big banks, and that 44 per cent of millennials had plans to buy some of the cryptocurrency in the next five years.
Hopefully Tesla is storing its password for the company’s new bitcoin in a safe place, after a programmer with more than 7,000 bitcoin forgot the password to the hard drive storing his cryptocurrency. With this week’s price rise, his stash is now worth more than $420 million.