Following Elon Musk’s promotion of bitcoin on Twitter, his company Tesla spent $1.5bn on it in January, say Caitlin Ostroff and Rebecca Elliott in The Wall Street Journal.
This is part of a move to invest its reserves in a wider range of assets, including gold, in order to “diversify and maximise returns” on any cash “not required to maintain adequate operating liquidity”. Tesla has also said that “it expects to start accepting bitcoin as payment for its products soon”.
Few companies are likely to follow Elon Musk, say Richard Waters and Eric Platt in the Financial Times. The whole point of having corporate reserves is to protect a “company’s financial liquidity”, so any cash on hand tends to go into “very high-quality, short-term fixed-income securities” rather than into a “risky asset such as bitcoin”, which could experience “significant declines”.
MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Even accepting bitcoin as a means of payment won’t be easy, as the mechanics of converting bitcoin into a $58,000 Tesla Model 3 “may be far more trouble than people think”, says Edward Robinson on Bloomberg.
This is because the customer and Tesla will have to agree on an exchange price “for one of the most volatile assets in the world”. Indeed, with even dedicated fans finding it “too impractical to use” for everyday transactions, it is unlikely that most consumers “will truly embrace assets that can lose 10% of their value in a day”. Still, at least Musk and Tesla are attracting “a lot of headlines”, which may be the real reason for the bitcoin purchase.
-
Investors should cheer the coming nuclear summerThe US and UK have agreed a groundbreaking deal on nuclear power, and the sector is seeing a surge in interest from around the world. Here's how you can profit
-
8 of the best houses for sale with folliesThe best houses for sale with follies in the grounds – from a five-storey Victorian Gothic tower in Tonbridge, Kent, to a former mill in Oxfordshire with gardens that include a folly on an island in a lake
-
Investors should cheer the coming nuclear summer
The US and UK have agreed a groundbreaking deal on nuclear power, and the sector is seeing a surge in interest from around the world. Here's how you can profit
-
8 of the best houses for sale with follies
The best houses for sale with follies in the grounds – from a five-storey Victorian Gothic tower in Tonbridge, Kent, to a former mill in Oxfordshire with gardens that include a folly on an island in a lake
-
A tale of two Reits – why performance matters for valuationAEW UK and Regional are two Reits that are valued very differently, despite a shared focus on properties outside London
-
Healthcare stocks look cheap, but tread carefullyShares in healthcare companies could get a shot in the arm if uncertainty over policy in the US wanes, but are they worth the risk?
-
The Palace of Westminster is falling downThe Palace of Westminster is in need of repair, but the bill is prohibitive, says Simon Wilson
-
'It’s time to buy British equities'Opinion There is no better place to start investing in UK equities than with two of MoneyWeek’s favourite investment trusts, says Max King
-
Sotheby’s fishes for art collectors – will it succeed?Sotheby’s is seeking to restore confidence in the market after landing Leonard Lauder's art collection, including Gustav Klimt's Portrait of Elisabeth Lederer
-
How to cash in on overlooked British bargains offering both income and growthOpinion Sue Noffke, manager of the Schroder Income Growth Fund, selects three UK stocks where she’d put her money
