Bitcoin Is ‘A Liquid Alternative To Cash’ Says Elon Musk’s Tesla

In a recent SEC filing, Tesla explained bitcoin’s liquidity use case while outlining its “long-term potential.”

  • In a recent SEC filing, Tesla doubled-down on its bitcoin investment as “a liquid alternative to cash” thesis.
  • Tesla experienced a rocky path from buying bitcoin, to accepting it as payment, and later removing it as a payment method over environmental concerns.
  • Tesla also recently entered the bitcoin mining space.

In a recent U.S. Securities and Exchange Commission (SEC) filing, Tesla Inc. reiterated its pro-Bitcoin position stating that bitcoin has “long-term potential” and is “a liquid alternative to cash.”

The filing also confirmed that the electric car maker did not sell any of its bitcoin holdings since the quarter prior.

During the first quarter of 2021, Tesla invested an aggregate of $1.5 billion in bitcoin, per an SEC filing at the time. Within that filing, Tesla provided information explaining how the investment would “provide us with more flexibility to further diversify and maximize returns on our cash that is not required to maintain adequate operating liquidity.”

Tesla also stated its intentions to accept bitcoin as a means of payment for goods and services in the future in the Q1 2021 filing. News of the investment spread across all forms of media and Elon Musk, the company’s CEO, became more active in discussions involving bitcoin.

On April 26, 2021 the initial investment for means of liquidity was strengthened when Musk took to Twitter in order to defend Tesla’s choice to sell 10% of its bitcoin holdings during Q2 2021 stating:

“Tesla sold 10% of its holdings essentially to prove liquidity of Bitcoin as an alternative to holding cash on balance sheet,” he wrote.

The SEC filing referencing the aforementioned sale netted Tesla a gain of $128 million. However, in June 13, 2021 Musk capitulated to market environmental concerns as he stated bitcoin needed to use more clean energy, thereby removing the option to receive bitcoin as payment until there was verifiable information showing “confirmation of reasonable (~50%) clean energy usage by miners with positive future trend,” he said.

On October 14, 2021 it was reported that Tesla was up over $1 billion on its initial investment into bitcoin. More recently, April 8, 2022 Tesla announced a partnership with BlockStream and Block, noting that Tesla energy equipment would be leveraged for a $12 million bitcoin mining facility.

In full circle, Tesla entered the bitcoin ecosystem with a massive $1.5 billion BTC buy, took action for the environment as it believed was necessary, held its BTC reserves, and returned to the ecosystem as a clean bitcoin mining participant. 

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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