Tesla has bought $1.5 billion worth of bitcoin since the beginning of this year. The electric car manufacturer also indicated that it has plans to accept bitcoin as a means of payment. This emerged from a document on the website of the Securities & Exchange Commission (SEC).
According to the document, Tesla has implemented a policy change effective Jan. 1 that allows “alternative reserve assets” to be included on the company’s balance sheet, for either the short or long term. Subsequently, Tesla invested a whopping $1.5 billion in bitcoin.
Tesla also informed the SEC that it plans to accept bitcoin payments soon. Tesla states that it can keep the earnings in bitcoin, or exchange them for another currency. The automaker seems to be keeping all options open.
It is noteworthy that Tesla seems to be planning to record any price decreases in the accounts as a loss, but not as a profit if the price rises. According to Tesla, current US regulations allow this. If so, that could mean that any fall in stock could reduce Tesla’s earnings in accounting terms, reducing the company’s tax liability. In the event of price increases, Tesla would only be liable to tax on the profit made on the actual sale of the bitcoins. However, it is not known whether Tesla has any plans to ever sell the purchased bitcoins.
“Moreover, digital assets are currently considered indefinite-lived intangible assets under applicable accounting rules, meaning that any decrease in their fair values below our carrying values for such assets at any time subsequent to their acquisition will require us to recognize impairment charges, whereas we may make no upward revisions for any market price increases until a sale, which may adversely affect our operating results in any period in which such impairment occurs.” – SEC form
Elon Musk is a proponent of bitcoin
The news comes shortly after Tesla CEO Elon Musk declared himself a supporter of Bitcoin. At the time, the developments surrounding GameStop’s shares seemed decisive for his statement of support. Now it seems he was already tacked before, possibly due to conversations with fellow billionaire and avid Bitcoin evangelist Michael Saylor.
Despite his support for Bitcoin, Musk has been paying a lot of attention to the parody cryptocurrency Dogecoin in recent days. Dogecoin has hardly any underlying value, but has an enthusiastic community and meme culture that Musk likes. That is why he regularly posts jokes about Dogecoin on Twitter. However, he said that he has no serious intentions with this, other than his statements about Bitcoin.
trend
Tesla is the largest and most well-known company to date to add bitcoin to company reserves, but not the first. The trend was started last year by Michael Saylor’s MicroStrategy, which has invested more than a billion dollars in over 70,000 BTC.
Payment provider Square, Twitter’s sister company, followed with a $50 million investment; about 1% of total company assets. Life insurer MassMutual then put $100 million worth of bitcoin on its balance sheet, and some smaller companies also joined the trend.
Read more about Elon Musk’s endorsement of Bitcoin here.
Footage: bullied, licensed CC BY 2.0
