Tesla buys $ 1.5 billion in Bitcoin, and will accept payment 

Tesla says it has invested more than $ 1 billion in Bitcoin and will accept the digital currency as payment for its electric cars

Tesla has invested about $ 1.5 billion in Bitcoin and has said it plans to start accepting the digital currency as payment for its high-end vehicles soon. Bitcoin rose 15% to over $ 43,000 on Monday morning.

Read Also: Guide: What is Bitcoin and how can it work?

California-based electric car maker Elon Musk unveiled the new strategy in a dossier with the US Securities and Exchange Commission, saying its investment in digital currency and other "alternative reserve assets" could grow.

Bitcoin rose to $ 43,863 and briefly reached a new all-time high. Tesla shares also rose.

In its fourth-quarter earnings report last month, Tesla said it had cash and cash equivalents worth $ 19.4 billion.

Dan Ives of Wedbush Securities said the move gives Tesla "more flexibility to further diversify and increase its cash returns."

Palo Alto-based Tesla announced its first annual net profit in 2020, and its share rose to become the world's most valuable automaker. Tesla joined the S&P 500 late last year and is currently valued at more than $ 820 billion.

It has been a wild ride for Bitcoin since it first appeared on Wall Street in December 2017. 

Major exchanges rolled out Bitcoin futures contracts, pushing it to nearly $ 19,300, a previously unheard of price for the currency. It quickly evaporated in 2018, and by December of that year, Bitcoin was worth less than $ 4,000 a coin.

Most recently, Bitcoin rose from below $ 11,000 in October to over $ 40,000 for the first time in its history.

While in the past two years companies have adopted the technology behind digital currencies such as Bitcoin, a concept known as the blockchain, the actual uses of Bitcoin have not changed since its rise three years ago. 

It is still largely used by those who distrust the banking system, criminals seeking money laundering, and, for the most part, as a store of value.

But the dominoes could be reduced if the big corporations follow in Tesla's footsteps and start accepting digital currency as a payment method.

Ives said: “This move could give Tesla shares more momentum as more investors begin to assess the company's exposure to Bitcoin/cryptocurrency as part of the overall assessment.

Telsa shares were up 2% at $ 869 in morning trade.

Critics say Tesla's sales and profits are meager compared to well-known automakers like Toyota and General Motors, and its huge valuation is not justified by financial fundamentals.