Tesla allocates 7.7% of gross cash to Bitcoin

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Tesla (TSLA) sent shockwaves across the financial markets Monday after a United States Securities and Exchange Commission filing confirmed that the electric vehicle maker has added Bitcoin (BTC) to its balance sheet.

Tesla’s latest Form 10-K filing for the fiscal year ended Dec. 31, 2020 shows a $1.5 billion allocation to Bitcoin. As Bitwise researcher David Lawant points out, Tesla’s BItcoin exposure represents roughly 7.7% of its gross cash position.

He derives those figures from Tesla’s cash and equivalents, which netted a gross of $19.4 billion by the end of 2020, or $9.8 billion net of debt and finance leases.

Tesla’s Bitcoin purchase puts it near the top of the corporate treasuries list. Only one other company – MicroStrategy – has purchased more of the digital asset as part of its strategic reserves. 

News of Tesla’s participation in the Bitcoin market sent prices soaring on Monday. As Cointelegraph reported, the BTC price hit a high near $45,000, easily surpassing its previous peak. Bitcoin's market cap exceeded $800 billion for the first time. 

In addition to adding BTC to its balance sheet, Tesla plans to accept the digital asset as a mode of payment. What’s more, the BTC it receives will not be liquidated for cash but added to its balance sheet.

Tesla is spearheading Bitcoin adoption at a crucial time in the bull market. Given Elon Musk’s propensity to move markets, Tesla’s newfound Bitcoin exposure could hasten retail adoption in the short term.

Bitcoin has also piqued the interest of large corporations. Microstrategy's Bitcoin-buying webinar last week registered over 1,400 signups.

BTC price soars above $43,000

Data from Cointelegraph Markets and TradingView tracked BTC/USD as a sudden spike to over $41,000 appeared as news of Tesla's plans trickled in.

filing with United States regulator the Securities and Exchange Comission (SEC) shows that the company plans to buy $1.5 worth of Bitcoin.

"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, which was duly approved by the Audit Committee of our Board of Directors, we may invest a portion of such cash in certain alternative reserve assets including digital assets, gold bullion, gold exchange-traded funds and other assets as specified in the future," it states.

"Thereafter, we invested an aggregate $1.50 billion in bitcoin under this policy and may acquire and hold digital assets from time to time or long-term. 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."

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The move follows encouraging signs from CEO Elon Musk, the world's richest man, who last week openly stated that he was a "supporter" of Bitcoin. Since then, however, signals have been mixed, after Musk removed Bitcoin from his Twitter biography but continued tweeting and promoting Dogecoin (DOGE).

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