Tesla helped push Bitcoin to an all-time high after the carmaker announced a $1.5-billion (roughly Rs. 10,930 crore) investment in the digital money and plans to accept the cryptocurrency from customers buying its electric vehicles.
Bitcoin's value has risen by about 50 percent this year, but skeptics say it is still highly volatile and regulators warn it is vulnerable to illicit use.
Musk, an expert at disrupting corporate norms as well as economic structures, last week briefly changed his Twitter bio to simply read "#bitcoin.
He also has taken to social media in recent days to promote Dogecoin, another digital money that was originally launched as a joke but has suddenly become more valuable.
In a securities filing, Tesla described the bitcoin purchase as an effort to boost company liquidity.
"In January 2021, we updated our investment policy to provide us with more flexibility to further diversify and maximise returns on our cash," Tesla said in announcing the $1.5 billion (roughly Rs. 10,930 crore) Bitcoin purchase.
As a result "we may invest a portion of such cash in certain alternative reserve assets including digital assets, gold bullion, gold exchange-traded funds, and other assets as specified in the future."
Tesla will also "begin accepting Bitcoin as a form of payment for our products in the near future," the company added.
Prices of Bitcoin surged to $44,795.20 (roughly Rs. 32.6 lakhs) around 13:25 GMT (6:55pm IST), before cooling slightly.
Tesla's move further institutionalises Bitcoin as an accepted means of value in American and global business.
Just last month, asset management giant BlackRock announced that two of its funds could include investments in bitcoin
Still, BlackRock Chief Executive Larry Fink has also expressed caution over Bitcoin, noting it remains highly volatile.
Tesla too acknowledged in the SEC filing that digital assets "may continue to be highly volatile" and vulnerable to "malicious" technology-based attacks.
During her Senate confirmation hearing, newly-installed Treasury Secretary Janet Yellen said cryptocurrencies are vulnerable to illicit finance.
Just 12 years old, Bitcoin has seen a meteoric rise since March 2020, when it stood at $5,000 (roughly Rs. 3.6 lakhs).
"This is probably one of the biggest developments for the cryptocurrency industry," noted Fawad Razaqzada, analyst at ThinkMarkets said of Tesla's move.
"Tesla is going to be a major player in the auto industry and if it starts accepting Bitcoin as a form of payment, it will give the digital currency further legitimacy."
Neil Wilson, chief market analyst at Markets.com, said Tesla's announcement could boost Bitcoin above $50,000 (roughly Rs. 36.4 lakhs) owing to Musk's influence "in shaping price action and moving markets."
But said Musk's stance on bitcoin raises "a real question about possible market manipulation" depending on the timing of Tesla's Bitcoin purchases with his statements online.
"This may not worry a lot of investors, but some conservative types might be concerned," Wilson said. "Tesla's move is the kind of big corporate support that bulls are latching onto: more corporate support = more mainstreaming."
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