Tesla’s most recent court filing with the SEC reveals that the company has recently purchased $1.5 billion worth of Bitcoin. The company’s current Bitcoin holdings represent eight percent of its available cash.
Elon Musk has recently praised cryptocurrencies like Bitcoin and the meme-inspired Dogecoin on Twitter. His promotion of cryptocurrencies has caused the value of Bitcoin to soar by 20 percent to an all-time high of $48,000 per bitcoin. He has also recently demonstrated a keen understanding of Bitcoin’s history with tweets like this:
It has also boosted the visibility of a minor cryptocurrency called Marscoin among Musk’s followers, who are familiar with his ambitions for SpaceX and the planet Mars. Marscoin founder Lennart Lopin has previously donated thousands of dollars in Marscoin to organizations that support the exploration and settlement of the planet Mars. He has also given a presentation at 2014’s International Mars Society Conference.
On the downside, Musk’s fondness of cryptocurrencies has made him a target of hackers who have seized control of his Twitter account to use for a common scam that has been floating around Twitter for a while. Scammers have also created fake Twitter accounts with the names and images of famous figures like Musk to use for their scams. Any tweet promising to send more Bitcoin who anyone who sends Bitcoin to a specific address should be regarded as automatically suspect and reported to Twitter. Twitter has, however, been notoriously slow to implement measures to combat these scammers.
Tesla’s move of investing that much in bitcoin is already being seen as a risky move that could drag the company down if the price tanks again. Previously, many investors who took out second mortgages to invest in bitcoin during its last all-time high of $19,000 in 2017 lost their homes when the price collapsed. Like the recent GameStop pump organized by Redditors, which Elon Musk has also commented on in a sharp barb aimed at Robinhood’s response to it, investing out of “Fear Of Missing Out” during Bitcoin’s most recent all-time high is an extremely risky move.
Musk’s recent plugging of Bitcoin in tweets may also spark an investigation from the SEC, who may see it as an illegal pump. It wouldn’t be the first time that Musk’s tweets have gotten him in trouble with regulators. He previously had to give up his position as Tesla’s chairman of the board of directors due to an ill-advised tweet that he had enough cash to take Tesla private. (More recently, he admitted that taking Tesla private would be impossible.)
He did have this advice on investing and holding cryptocurrency, echoing many cryptocurrency insiders’ advice of, “Not your keys, not your coin”:
Should Tesla stick to to fixing the safety issues with its cars and problems with malfunctioning onboard computer systems that has sparked lawsuits and mandatory recalls? Or is Elon Musk’s decision to sink eight percent of the company’s cash into Bitcoin a brilliant move? He has even gone along with the joke that he should be “CEO of Dogecoin” by putting that on his Twitter profile for a day, although he has also recently acknowledged that maybe a cryptocurrency inspired by a popular meme should not be taken seriously.
That hasn’t stopped him from buying Dogecoin for his youngest son. It does make for a cute gift.