Bitcoin surges above $US47,000, driven by Elon Musk and Tesla’s $US1.5b cryptocurrency bet

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FILE PHOTO: Representations of virtual currency Bitcoin are seen in this picture illustration taken taken March 13, 2020. REUTERS/Dado Ruvic/Illustration

Bitcoin, the infamously volatile cryptocurrency, has surged to its most expensive levels ever thanks to the world’s richest man.

Key points:

  • The price of bitcoin has surged by more than 330% in the past year
  • PayPal, Square and Tesla are some of the big companies that have invested in crypto
  • Tesla plans to accept bitcoin as a payment method “in the near future”.

Elon Musk is serious about cryptocurrency.

On Monday, Musk moved from jokey tweets to major investments when Tesla disclosed in an SEC filing that the company invested $1.5 billion in bitcoin in January, and aims “to begin accepting bitcoin as a form of payment for our products in the near future.”

This amounts to 10% of Tesla’s cash reserves, and is the largest corporate purchase of bitcoin ever.

Bitcoin (BTC) spiked 14% on the news to a new all-time-high above $44,000, and Tesla (TSLA) shares jumped 2%.

What is bitcoin?

  • A digital cryptocurrency
  • It operates on a decentralised peer-to-peer network, with no central authority or government backing
  • It can be bought with fiat currencies like Australian dollars from online exchanges or created through mining

Tesla’s decision sparked euphoria across the broader digital currency market, with the second-largest crypto (ethereum) also jumping to a record high, above $US1,700.

But the incredible thing was that Telsa didn’t even make a grand announcement about it.

Eagle-eyed investors found out about the company’s bet on cryptocurrencies buried on page 106 of Tesla’s annual reports (it was under the obscure heading “Note 23 – Subsequent Events”).

The price of bitcoin was sitting around $US39,000 on Monday evening (Australian time), just before the US Securities and Exchange Commission (SEC) published Tesla’s report online. So in just 12 hours, bitcoin’s value has soared by around $US8,000.

Why is Tesla investing in bitcoin?

Tesla boss Elon 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.

In its annual report, Tesla said it updated its investment policy in January so it could have “more flexibility to further diversify and maximize returns” on any extra cash it was sitting on.

The new policy was broad enough that Tesla could invest in “specified alternative reserve assets”.

So it decided to put $US1.5 billion into bitcoin, and is expecting to allow customers to start paying for their cars using the cryptocurrency “in the near future”.

But the company qualified that statement by saying it was “subject to applicable laws and initially on a limited basis”.

Tesla also said if it accepts bitcoin as payment, it “may or may not” convert them into cash.

If the value of its bitcoin investment rises, Tesla said it won’t record those capital gains in its financial reports, although it will write-down falls if the value of its bitcoin slip below their purchase price.

“Gains (if any) will not be recorded until realized upon sale,” the company wrote, testament to its unpredictability as a store of value (in contrast to mainstream currencies).

Planning to accept bitcoin as payment puts Tesla in league with PayPal, which began allowing its customers to buy and sell bitcoin, ether (ETH), litecoin (LTC), and bitcoin cash (BCH) in its PayPal wallet in December, and will add the function to Venmo this year, along with the ability to make purchases with crypto.

On PayPal’s Q4 earnings call last week, CEO Dan Schulman said crypto trading volume has “exceeded expectations” and that the company’s crypto efforts so far are “just the beginning of an extensive roadmap” around crypto.

SpaceX CEO and owner Elon Musk celebrates after the launch of a SpaceX Falcon 9 rocket and Crew Dragon spacecraft on NASA's SpaceX Demo-2 mission to the International Space Station from NASA's Kennedy Space Center in Cape Canaveral, Florida, U.S. May 30, 2020. REUTERS/Steve Nesius     TPX IMAGES OF THE DAY
SpaceX CEO and owner Elon Musk celebrates after the launch of a SpaceX Falcon 9 rocket and Crew Dragon spacecraft on NASA’s SpaceX Demo-2 mission to the International Space Station from NASA’s Kennedy Space Center in Cape Canaveral, Florida, May 30, 2020. REUTERS/Steve Nesius

Tesla accepting bitcoin as payment in the future is “a potential game changing move for the use of bitcoin from a transactional perspective,” Wedbush analyst Dan Ives wrote in a note on Monday, adding that the news “formalizes the strategy of Musk and Tesla diving into the deep end of the pool of bitcoin and crypto.”

Musk has tweeted about cryptocurrencies a number of times over the past year, but Tesla’s latest move takes his support from mere social media flag-waving to serious investment by the $820 billion publicly traded company he helms.



  1. Wilx says:

    This man is a go getter. I admire his passion to achieve his purpose.
    Go bitcoin✊🏽

    • sdblog says:

      business is always about risks taking there’s nothing one cannot achieve if you set your mind to it.

  2. The Mystery Man says:

    Man. This is big

  3. Lanre says:

    A game changing decision.

  4. Cornelius I. says:

    What does this mean for note currency?

    • The Reply Martian says:

      Nothing… it wont stop central bank from printing money. except global market start running transaction solely on BTC. But for now, we all still have to convert our BTC to note currency to make majority of today’s transaction. We still have to wait for world business to start doing business solely on BTC.

    • sdblog says:

      note currency will remain stable for as long as is predictable

  5. Alex says:

    Crypto is the way forward