Electric vehicle maker Tesla Motors announced it has invested in Bitcoin (BTC). The announcement triggered a roughly 20%, or $8,000, surge in the largest cryptocurrency by market cap, to refresh all-time high at $47,156.
In a filing with the Securities and Exchange Commission, Tesla said it has bought an aggregate $1.5 billion worth of Bitcoin, and the purpose of the purchase is for “more flexibility to further diversify and maximize returns on our cash.”
The $1.5 billion worth of Bitcoin represents approximately 7.9% of its cash in the investment. The company had more than $19 billion in cash and cash equivalents on hand at the end of 2020, according to its most recent filing.
Tesla also said it may “acquire and hold digital assets from time to time or long term.” And it will start accepting payments in Bitcoin in exchange for its products.
The $1.5 billion worth of Bitcoin will give Tesla liquidity in the cryptocurrency once it starts accepting it for payments.
Next: Apple to enter crypto?
The price of Bitcoin took off after the announcement, setting a new all-time high of $47,156. Bitcoin’s market value naturally rose as well, making the cryptocurrency more valuable than all but seven of the world’s publicly traded companies, just ahead of Tesla with its market cap of $820.7 billion.
At the time of writing, Bitcoin is trading at $46,048.84, up 20% over the last 24 hours. The second-largest cryptocurrency, Ether (ETH), is trading at $1,728.69, up 9.1%, after reaching a new all-time high of $1,770.
The firm joins a growing list of publicly traded firms in the United States, such as MicroStrategy, and Square, that have allocated some of their balance sheets to Bitcoin.
iPhone maker Apple Inc may be the next big company to enter the crypto market, both by allowing Bitcoin to be exchanged on its Apple Wallet service and investing some of its own reserves in units of the cryptocurrency, said Mitch Steves, an analyst at RBC Capital Markets.