Elon Musk, the CEO of Tesla, announced in a tweet on Wednesday that the electric car company will now accept payments in the form of the cryptocurrency bitcoin. Bitcoin’s price surged roughly 3% in the hour after the tweet.
“You can now buy a Tesla with Bitcoin,” Musk tweeted early Wednesday morning.
Musk explained in a follow-up tweet that customers outside the U.S. would be able to purchase Teslas with bitcoin “later this year.” Musk also was quick to note that Tesla will hold the bitcoin as cryptocurrency and won’t convert it to fiat currencies, such as the U.S. dollar.
“Tesla is using only internal & open source software & operates Bitcoin nodes directly. Bitcoin paid to Tesla will be retained as Bitcoin, not converted to fiat currency,” Musk tweeted.
One aspect of the new bitcoin plan that wasn’t explained? Will Tesla price its cars based upon the number of bitcoins paid or the fiat conversion of the time? If Tesla starts charging, for example, one bitcoin for a car, that will be the equivalent of roughly $56,000 today, but could be much higher or lower tomorrow.
Tesla disclosed in a February filing with the SEC that the company had purchased $1.5 billion in bitcoin earlier in the year.
From the SEC filing:
In January 2021, we updated our investment policy to provide us with more flexibility to further diversify and maximize returns on our cash that is not required to maintain adequate operating liquidity. As part of the policy, which was duly approved by the Audit Committee of our Board of Directors, 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. Thereafter, we invested an aggregate $1.50 billion in bitcoin under this policy and may acquire and hold digital assets from time to time or long-term. Moreover, we expect to begin accepting bitcoin as a form of payment for our products in the near future, subject to applicable laws and initially on a limited basis, which we may or may not liquidate upon receipt.
Telsa did not disclose what price the company had locked in on, but it did explain dipping its toe in cryptocurrencies came with substantial risk, given the extreme fluctuations in price. Bitcoin’s price was roughly $6,700 a year ago today. It’s currently sitting at $56,371.