American electric vehicle company, Tesla Inc., has become the first automaker to acquire bitcoins worth $1.5billion causing the price of Bitcoin to jump to a high price of 17% to $44,200.
In a filing with Securities and Exchange Commission, Tesla uncovered plans by the company to invest a share of its assets in digital assets and that payments for its creations will be made in bitcoin on a limited basis and strictly obeying applicable laws. This will provide the platform for Tesla to obtain liquidity in cryptocurrency at the end of the day.
This development is coming a few days after Tesla CEO, Elon Musk, put the hashtag bitcoin on his Twitter profile page which he later removed. The action, however, boosted Bitcoin even as Musk continued to discuss about cryptocurrency on his Twitter page.
The company also said it would begin accepting the digital token as a form of payment for its electric cars. The developments amounted to the biggest endorsement of the controversial cryptocurrency by a mainstream firm.
In a stock market filing, Tesla said it updated its investment policy in January and now wanted to invest in reserve assets such as digital currencies, gold bullion or gold exchange-traded funds.
Tesla’s investment in cryptocurrency has been described as a game-changer by some analysts.
Vice-president, Market Intelligence at cryptocurrency research firm, Messari, Eric Turner said Tesla’s move would further encourage other companies to invest in Bitcoin.
He said, “I think we will see an acceleration of companies looking to allocate to Bitcoin now that Tesla has made the first move.
“One of the largest companies in the world now owns Bitcoin and by extension, every investor that owns Tesla, or even just an S&P 500 fund, has exposure to it as well.”
Regardless, Chief Market Analyst, Markets.com, Neil Wilson, expressed his concerns describing Bitcoin as a very volatile cryptocurrency.
“Tesla is now starting to take on big risk, this may not worry a lot of investors, but some conservative types might be concerned.” he said.