On Monday Tesla announced that it has bought $1.5 billion worth of Bitcoin. Saying in a filing with the US Securities and Exchange Commission that it purchased the cryptocurrency for “more flexibility to further diversify and maximize returns on our cash.”
The move represents an investment of a significant percentage of its cash in the investment. As Tesla had more than $19 billion in cash and cash equivalents on hand at the end of 2020, according to its most recent filing.
“This is big news,” Galaxy Digital CEO and Chairman Michael Novogratz said in a CNBC interview. “I mean Elon Musk has been better than any CEO over the last two years of driving his stock price and driving shareholder value”.
One reason is he listened. He listened to millennials and Gen Z. This is the currency of their generation in lots of ways, it’s the store of wealth in their generation.
Tesla To Accept Bitcoin For Its Products
The company also announced that it will start accepting payments in bitcoin in exchange for its products. “Subject to applicable laws and initially on a limited basis,” which would make Tesla the first major automaker to do so. Furthermore, the $1.5 billion in Bitcoin will give Tesla liquidity in the cryptocurrency once it starts accepting it for payments.
Novogratz believes this should only be the beginning and others should follow suit. “Every company should be looking at how to accept digital payments as part of their business scheme,” he added.
“It’s not that difficult, it’s what customers want, it’s where the world is moving. So that I think he’s getting ahead of the curve and I think you’re gonna see every company look to figure that out, from McDonald’s to Bojangles, you name it.”
The question many now have after this move is what this means for Bitcoin’s future. Whether this is just the beginning of momentum being built. Mohamed El-Erian, economic adviser at Allianz and Gramercy believes Tesla’s investment, and plans on accepting it as payment bode well for the crypto.
“Those are two powerful endorsements for the notion, and I wanna stress the notion, that Bitcoins are a currency or money,” El-Erian said. “Because, after all, money is a store of value, money is a form of payment, so yes that will build more momentum.”