TSLA Tesla Inc

By Caitlin Ostroff, Rebecca Elliott and Micah Maidenberg 

Tesla Inc. on Monday said it bought $1.5 billion in bitcoin, a purchase that comes after Chief Executive Elon Musk has promoted the cryptocurrency and other digital-currency alternatives on Twitter.

The electric-vehicle company also said it expects to start accepting bitcoin as payment for its products soon. Bitcoin prices jumped more than 10% after the announcement, according to cryptocurrency research and news site CoinDesk.

Tesla disclosed the bitcoin purchase in its latest annual report filed on Monday, saying the move aims to provide "flexibility to further diversify and maximize returns on our cash that is not required to maintain adequate operating liquidity." The policy change also enables Tesla to invest cash in gold bullion and gold exchange-traded funds among other assets.

"We believe our bitcoin holdings are highly liquid," Tesla said. The purchase came after a board committee approved changes to a company policy on investments.

Mr. Musk has shown he is interested in bitcoin. Last month, he changed his Twitter biography to "#bitcoin," a move that sent prices for it higher, though the mention has since been removed.

"I think bitcoin is really on the verge of getting broad acceptance by sort of the conventional finance people," he said last week on the social-networking app Clubhouse. Mr. Musk also acknowledged during that conversation that his comments can move markets.

"I gotta watch what I say here 'cause some of these things can really move the market," he said after being asked about cryptocurrency.

Tesla didn't immediately respond to a request for comment.

Tesla bolstered its cash position last year by selling billions in new stock. The company's cash holdings totaled around $19.4 billion at the end of last year, up from around $6.3 billion at the end of 2019.

"He's already telegraphed it to the market," said Meltem Demirors, chief strategy officer at London-based asset management firm CoinShares, a reference to when Mr. Musk added bitcoin to his Twitter biography. "One of the world's largest corporations doing this -- I think it opens the floodgates."

His tweets about dogecoin, a cryptocurrency that was started in 2013 as a joke, also made that virtual currency much more valuable.

Bitcoin is becoming more accessible to the public with PayPal Inc. saying last year that it would allow users to directly buy and sell bitcoin in their digital wallets. Square Inc. also allows users to buy bitcoin through its Cash App.

Some companies have also begun increasing holdings of bitcoin, with Square buying $50 million worth of the digital currency in October to use as a hedging instrument in its corporate treasury. In late January, bitcoin self-mining company Marathon Patent Group Inc. said it purchased $150 million worth of bitcoin.

Bitcoin recently traded Monday at $44,183.45, according to CoinDesk. In January, its price averaged $34,730.12.

"It is absolutely significant," said Ms. Demirors. "Bitcoin sentiment has already shifted so dramatically over the last year but over the last three months that's only accelerated. From here it only accelerates."

Write to Caitlin Ostroff at caitlin.ostroff@wsj.com, Rebecca Elliott at rebecca.elliott@wsj.com and Micah Maidenberg at micah.maidenberg@wsj.com

(END) Dow Jones Newswires

February 08, 2021 10:02 ET (15:02 GMT)

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