Tesla sends bitcoin soaring with US$1.5b investment, payment promise

[LONDON] Tesla said on Monday it had invested around US$1.5 billion in bitcoin and expected to begin accepting payment for its cars and other products with it in the near future, prompting a 7 per cent jump in the electronic currency.

Bitcoin price rose as much as 1 per cent to an all-time high of US$43,725.51 on the news. It was up about 10 per cent at US$42,620 at 8.08 am in New York.

The announcement to invest in Bitcoin came after two weeks in which comments from chief executive Elon Musk encouraged small-time investors to buy bitcoin and meme-based digital currency Dogecoin as well as shares of US video game chain GameStop. Musk said a week ago in a tweet that bitcoin was "on the verge" of being more widely accepted among investors.

Analysts said the move by Tesla was liable to prove a game changer for the currency.

"I think we will see an acceleration of companies looking to allocate to Bitcoin now that Tesla has made the first move," said Eric Turner, vice president of market intelligence at cryptocurrency research and data firm Messari.

"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." Tesla said in a filing the decision was part of its broad investment policy as a company and was aimed at diversifying and maximizing its returns on cash.

It said it had invested an aggregate US$1.5 billion in bitcoin under the changed policy and could "acquire and hold digital assets from time to time or long-term".

Bitcoin surged more than 10 per cent on Monday to a record high after Tesla's disclosure.

REUTERS