Tesla Bought $1.5 Billion of bitcoin!

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3 years ago

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As with every Elon Musk - related story lately, everything began on Twitter. On December 20th, Elon started publicly stating that he's now interested in Bitcoin. To that, Michael Saylor, the CEO of Microstrategy answered yes, and after an exchange of tweets, Saylor offered to give Elon some offline advice on how to convert part of the Tesla Balance Sheet to Bitcoin. A few days later, Elon changed his Twitter Bio to #bitcoin​, and tweeted "It was inevitable".

Tesla 10-K form

On February 8th, Tesla released their 10-K form, in which they state:

"In January 2021, we updated our investment policy to provide us with more flexibility to further diversify and maximize returns on our cash that is not required to maintain adequate operating liquidity. As part of the policy, we may invest a portion of such cash in certain specified alternative reserve assets. Thereafter, we invested an aggregate $1.50 billion in bitcoin under this policy. Moreover, we expect to begin 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. Digital assets are considered indefinite-lived intangible assets under applicable accounting rules. Accordingly, any decrease in their fair values below our carrying values for such assets at any time subsequent to their acquisition will require us to recognize impairment charges, whereas we may make no upward revisions for any market price increases until a sale. As we currently intend to hold these assets long-term, these charges may negatively impact our profitability in the periods in which such impairments occur even if the overall market values of these assets increase."

There are 2 key takeaways from this statement:

1. Tesla is HODLing bitcoin, viewing it as an investment rather than a mere reserve asset.

2. Tesla will be accepting bitcoin as payment.

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