Tesla Inc. (NASDAQ: TSLA) disclosed Monday it has invested $1.5 billion in Bitcoin cryptocurrency. It plans to begin accepting it in payment for its electric vehicles.
The move was included in the business risks section of Tesla’s annual 10-K filing with the Securities and Exchange Commission. Tesla CEO Elon Musk has been tweeting cryptic but supportive messages to feed the craze over the meme-based Dogecoin cryptocurrency.
In its SEC filing, Tesla wrote that it updated its investment policy in January “to provide us with more flexibility to further diversify and maximize returns on our cash that is not required to maintain adequate operating liquidity.”
That could be read as speculating. Regulators could take notice.
Musk ran afoul of the SEC in 2018 when he tweeted that he could take Tesla private at $420 per share. In a settlement with the government, Musk agreed to step down as chairman of the company. He and Tesla each were fined $20 million.
Tesla shares have more than quadrupled. They closed Friday at $852.23, almost double the $446 share price following a 5-for-1 stock split on Aug. 31. Tesla’s valuation exceeds $773 billion. That is more than the combined value of the world’s major automakers. Musk is the world’s richest man. His net worth of around $200 billion.
Detailing the risks
The new investment policy, approved by Tesla’s audit committee, covers “certain alternative reserve assets, including digital assets, gold bullion, gold exchange-traded funds and other assets as specified in the future.” That included the $1.5 billion investment in Bitcoin.
Tesla “may acquire and hold digital assets from time to time or long term.” And the automaker expects to soon accept Bitcoin in payment its electric vehicles. That would be “subject to applicable laws and initially on a limited basis, which we may or may not liquidate upon receipt.”
Tesla listed unpredictable things that could go wrong: price volatility, faddishness, long-term adoption, lack of a physical form, reliance on technology to buy and sell, cyberattacks and accounting issues.
“Finally, the extent to which securities laws or other regulations apply or may apply in the future to such assets is unclear and may change in the future,” the filing said. “If we hold digital assets and their values decrease relative to our purchase prices, our financial condition may be harmed.”
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