Car manufacturer Tesla announced on Monday it would begin accept payments made using Bitcoin for the first time.
The company, owned by eccentric billionaire Elon Musk, also revealed it had already bought $1.5 billion worth of the cryptocurrency.
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Mr Musk has previously heralded the potential of Bitcoin in social media posts and claimed last week it was “on the verge” of being more widely accepted among investors.
Monday’s announcement, buried deep in Tesla’s 2020 annual report, prompted a surge in the value of Bitcoin as traders rushed to buy it.
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Tesla’s revelation caused the price of Bitcoin to jump 17% to a record high of $44,220 (£32,210) by Monday afternoon, according to trading platform Coindesk.
The cryptocurrency has proved to be a volatile investment, with prices soaring by 300% in the last year alone.
But some analysts have warned that the risks of investing are too great for both private investors and financial institutions for it to be more widely adopted.
Nevertheless, on Monday Tesla said it had invested an aggregate $1.5 billion in Bitcoin under the changed policy and could “acquire and hold digital assets from time to time or long-term.”
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. The report said it ended 2020 with $19.38 billion in cash and cash equivalents.
“We expect to begin accepting Bitcoin as a form of payment for our products in the near future, subject to applicable laws and initially on a limited basis, which we may or may not liquidate upon receipt,” the company said.
Tesla said it had invested an aggregate $1.5 billion in Bitcoin under the changed policy and could “acquire and hold digital assets from time to time or long-term.”
Mr Musk’s tweets have previously caused the price of the cryptocurrency to fluctuate as he talked up its potential.
He has also driven up prices of the meme-based digital currency Dogecoin and shares of US video game chain GameStop in the past few weeks.
In late January, Musk changed the bio of his Twitter account, which has 46 million followers, to include #bitcoin.
But banks remain sceptical of digital currencies and Bank of England Governor Andrew Bailey said in October he was “very nervous” about people using Bitcoin for payments.
“I have to be honest, it is hard to see that Bitcoin has what we tend to call intrinsic value,” he said. “It may have extrinsic value in the sense that people want it.”
Tesla is the latest corporate to add Bitcoin to its treasury following similar moves by Square, the payments company led by Twitter CEO Jack Dorsey and software firm MicroStrategy.
In December, Musk had asked about the possibility of converting “large transactions” of Tesla balance sheet into Bitcoin on Twitter. Michael Saylor, Microstrategy’s CEO had suggested the billionaire make the move.
PayPal said in October that it would allow customers to buy, sell and hold Bitcoin and other virtual coins using its online wallets.
Additional reporting from Reuters
— to inews.co.uk