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Tesla invests $1.5 billion in Bitcoin as Elon Musk praises cryptocurrencies

Musk may carry a lot of weight, but consumers need to be cautious about how they invest

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Photo (c) Velishchuk - Getty Images
Elon Musk is jumping on the fast-moving Bitcoin bandwagon in a big way. In a filing with the Securities and Exchange Commission (SEC), Tesla announced that it has invested $1.5 billion in the cryptocurrency as part of its investment in “alternative cash reserve assets.” Moreover, the company says its plans include accepting bitcoin as a form of payment for its products in the near future.

“We believe our bitcoin holdings are highly liquid,” the company wrote. However, it said that it’s fully aware that digital asset prices can be volatile. They’ve proven to be just that several times in the last two years, hitting an all-time high of $35,000 just a few short weeks ago.

Questions raised about Musk’s cheerleading

Musk -- a tech entrepreneur with strong ties to Tesla, SpaceX, and PayPal -- has never been one to play wallflower when it comes to crowing about his investments on Twitter. In fact, he crossed the line a little too assertively for the SEC in 2018 and got on his shareholders’ bad side in 2019. Now, some are questioning his latest enthusiasm for digital currencies.

“The moves raise questions around CEO Elon Musk’s recent behavior on Twitter, where he has been credited for increasing the prices of cryptocurrencies like bitcoin and dogecoin by posting positive messages that have encouraged more people to buy the digital currencies,” commented CNBC’s Steve Kovach.

Two weeks ago, Musk bravely added the hashtag #bitcoin to his Twitter bio, a rah-rah move that may have contributed to pushing up the price of the cryptocurrency by close to 20 percent. Forty-eight hours later, he championed Bitcoin even further on the social media chat site Clubhouse, saying “I do at this point think bitcoin is a good thing, and I am a supporter of bitcoin.” 

Musk’s Bitcoin love quickly showed up in the market. Bitcoin prices moved up 13.96 percent from late Sunday to midday Monday, hitting $44,200 before leveling off to $43,223.19. The price of Tesla stock also shot up to $871 at the opening bell before settling in the mid-$160s.

Here, Doge, Doge

Over Super Bowl weekend, Musk pushed the envelope again, this time tweeting that digital currency Dogecoin was the “future currency of Earth.” 

With support from peer celebrities like KISS’ Gene Simmons and Snoop Dogg, Dogecoin -- a crypto coin that started out as a joke based on the “doge” meme -- shot up 37 percent over the course of 24 hours to a record high before falling to half of that uptick by noon on Monday.

The real Musk vs. the fake Musk

There’s no doubt that Musk can move the needle on things whether they’re investments or innovations. One scammer decided they’d masquerade as Musk to show just how bullish he is on digital currencies. 

A fake Musk took to both Twitter and Medium with an offer to double any bitcoin a person sent them. They even said they’d throw in a free Tesla Model S to anyone who would send in 2 bitcoins or 100 ethereum. As you might guess, this is a royal scam. 

“This website is [run] by a scammer and they say that they will give double money to the users instantly when they deposit money into their bitcoin address. It’s a scam!!!,” declared one post on the site BitcoinAbuse.

Impersonation scams are starting to grow on Twitter, YouTube, and other platforms, and the Federal Trade Commission (FTC) has warned everyone to be careful. One victim recently told ConsumerAffairs’ Mark Huffman just how easy it is to be conned by scammers. Once they’ve got you in their snare, you could quickly see $20,000 of your hard-earned money go up in smoke.

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