Tesla invests $1.5B in bitcoin

Yahoo Finance’s Alexis Christoforous and Jared Blikre discuss Tesla’s investing $1.5B in bitcoin.

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ALEXIS CHRISTOFOUROS: I want to get to Jared Blick right away today because we have got lots of news to sift through, including Bitcoin, which is also at a record high now because of, let's just call it the Tesla effect. Jared?

JARED BLIKRE: You bet. What an incredible story. And we say that a lot recently. But let's check out what's happening in the charts because I want to take us through what has happened with Tesla and Bitcoin. So here's the stock. Tesla is up about 63 basis points, not a big move here. You can see over the last month and a half, really just consolidating near highs, pushing up against that upper end.

And what could the catalyst be? Well, Bitcoin itself could be. But let me take us through the Bitcoin narrative. This is also over the last two months.

And I highlight some tweets. Now, this first one regards Elon Musk. And this was actually a response by Michael Saylor to one of his tweets. He says, "Elon if you want to do your shareholders a $100 billion favor, convert the Tesla balance sheet from US dollars to Bitcoin. Other firms on the S&P 500 would follow your lead. And in time, it would grow to become a $1 trillion flavor."

And then Elon Musk replies, "Are such large transactions even possible?" So while we're not in the process, or he's not in the process, apparently, of converting the entire balance sheet to Bitcoin, he did by $1.5 billion worth of Bitcoin in January. And we know on January 29, this is what happened with Bitcoin, Elon Musk simply changed his to Bitcoin hashtag there. And we saw what happened after that within the market.

As of early February, it was still there. And that's when we got this launch after the breakout upside of that consolidation. So you put it all together, I think this is a trend that we're going to see with other companies. And there was a lot of regulatory considerations as well because if you think about it, if somebody is cashing in their Bitcoin for a car, that's kind of sidestepping a lot of the Coinbase and other payment exchanges.

So with that regulatory focus, I think the IRS is going to be in there, FinSense going to have a few questions. So marching in the right direction here for Bitcoin, but still in some uncharted territories, Alexis.

ALEXIS CHRISTOFOUROS: I wonder too if regulators have anything to say about the way Elon Musk has been talking up Bitcoin and changing his profile there are on Twitter to hashtag Bitcoin. And now it's revealed that his company has such a large investment. Do you think there might be any kind of conflict there?

JARED BLIKRE: Well, there could be, but I don't think so. I think he was very careful about it. We know, and Elon Musk knows he's got in trouble for tweeting before. Simply changing your bio to Bitcoin or just promoting Dogecoin or saying you like it--

I mean, I look at it like this. Remember a few quarters ago last year, Warren Buffett's Berkshire Hathaway announced that it had made an investment in a gold miner. That was Buffett getting into gold. I don't see that as a problem.

Now, he wasn't talking up gold before that or this particular miner. But I think at the end of the day, the regulators are going to give him a pass on this. But they're going to delve more deeply into how companies have to regulate their own investments, especially when you're paying for something with Bitcoin or some other token, Ether for instance.

ALEXIS CHRISTOFOUROS: Yeah. Now, I also see that a lot of the companies that have incorporated crypto into their business model, like PayPal, like Square, they're also moving today. And incidentally, there's an analyst-- I think you wrote a piece on this for the website today, Jared, about an analyst calling on Apple to now include Bitcoin in their wallet.

JARED BLIKRE: Yeah, that's pretty incredible. And if we look at our crypto stock heat map here, you don't really see much in the way of Apple. But I think they're going to be joining this list pretty quickly. And we've got some big gains here, by the way.

But yes, RBC is saying Apple should get into the Bitcoin business to join the likes of Square and PayPal Holdings, saying this wallet initiative appears to be a clear multibillion dollar opportunity for the firm, if they do it, that is. It's a potential for well over $40 billion in annual revenue with very limited R&D. And we already know that Apple's ecosystem is kind of the flagship, the leader in security. So it could suffer-- excuse me, not suffer. It could have a competitive advantage if Apple Pay were to get into the crypto space as well, Alexis.