Buy A Tesla With Bitcoin?

Dear Reader, 

It was reported in February of this year that Tesla’s most recent balance sheet revealed its total debt is at $11.69 billion ($9.56 billion in long-term debt and $2.13 billion in current debt.) 

Even with billions of dollars in debt, Tesla had its first profitable year since it was founded in 2003. 

New York Times reported, “Tesla’s revenue and bottom line were helped by the sale of $401 million in emissions credits in the fourth quarter to other automakers who need them to meet regulatory standards.”

Tesla is looking to grow its profits even more in 2021 since its investment in Bitcoin in February. Earlier this month, the U.S. electric carmaker disclosed in a Securities and Exchange Commission filing that it had bought $1.5 billion worth of Bitcoin. 

Tesla’s filing with the SEC includes this statement:  

“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, we may invest a portion of such cash in certain specified alternative reserve assets.

Thereafter, we invested an aggregate $1.50 billion in bitcoin under this policy. 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.

Digital assets are considered indefinite-lived intangible assets under applicable accounting rules. Accordingly, any decrease in their fair values below our carrying values for such assets at any time subsequent to their acquisition will require us to recognize impairment charges, whereas we may make no upward revisions for any market price increases until a sale. As we currently intend to hold these assets long-term, these charges may negatively impact our profitability in the periods in which such impairments occur even if the overall market values of these assets increase”.

Bitcoin was originally intended to be a digital currency for transactions and payment. According to the same SEC filing by Tesla, you may soon be able to purchase an electric vehicle with Bitcoin. This event could open the doors for other retailers to follow their lead. 

The World Is An Ever-Changing Place

Some changes appear to be good for humanity and some do not. Right now we are in a place of transition in many different areas, equality for women, equality for minorities, the health of the environment, security from terrorism, security from viruses, capitalism and socialism, and more. Changes are always happening.

Generally, most people who want change think it is coming is too slow. But it doesn’t have to be. There is a way to make change happen faster. How? Make change profitable.

This is, of course, counterintuitive for many people who want change. They think change can only come through elections and the government. That is why elections get so heated. And why many people make demons out of those who hold different political positions than them.

But again, it doesn’t have to be that way. If more people understood how capitalism worked and how it could work for the causes they believe in most, we’d have a lot less political division and a lot more people focused on making meaningful change by making it profitable to change. A quick look at history shows how this happens all the time.

Tax Incentives 

When the government wanted more housing for the population what did they do? They didn’t regulate the housing industry and make it mandatory to build affordable housing. No, they made it profitable for investors by giving them tax breaks. The same is true when the government needed more energy, they gave oil drilling tax breaks.

For example, Apple received tax breaks and incentives from the city of Austin, TX —$16 million—because Austin knew that Apple would be adding 15,000 jobs to the area. The City of Austin doesn’t want to be in the creating jobs business, but it’ll incentivize companies to do so.  

Another example is Tesla. Elon Musk took on the automotive giants like General Motors with his company Tesla, making electric cars sporty and sexy. Up until this year, Tesla had never realized a profit. It relied on Government subsidies to build its technology. The government doesn’t want to build electric cars, it’ll incentivize companies to do so. 

It’s simple… money and the drive for profits make a change.

In 1966, at the age of 19, I was a junior officer onboard Standard Oil tankers sailing up and down the California coast. It was then that I became interested in oil. In the 1970s, I worked for an independent investment banker packaging and selling oil and gas tax shelters to wealthy clients. Today, Kim and I continue to invest in oil and gas projects. 

We do not invest in stocks or mutual funds of oil companies such as BP or Exxon. We invest in oil exploration and development partnerships, which means we partner with oil entrepreneurs in specific projects, primarily in Texas, Oklahoma, and Louisiana, coincidentally where many of our apartment houses are located. If successful, we receive a percentage of income from the sale of oil and natural gas, aka cash flow with tax advantages.

Oil and natural gas are essential for transportation, food, heating, plastics, and fertilizers. If you look around your kitchen, oil is in use everywhere, even in the foods you eat.

The reason the government offers huge tax incentives is that drilling for oil is very risky and oil is essential for life, our economy, and our standard of living. And like Tesla and Apple, since the government doesn’t want to drill for oil, it’ll incentivize entrepreneurs to do so. 

Tax Incentives And Debt

As strange as it may sound to most people, the government not only wants us to get into debt, the government offers tax incentives to get into debt.

If you and I stop borrowing, the economy stops running because today, all money is debt. In other words, “Debt makes the world go round.”

In 1973, my rich dad said there were three things I needed to learn if I wanted to follow in his footsteps. They were: 

  1. Learn to sell. The ability to sell is the most important skill of an entrepreneur. The most important job of an entrepreneur is to raise money.
  2. Learn to invest via market trends. Today, this is called technical analysis, predicting the future of markets by tracking the past.
  3. Learn to invest in real estate. Learn how to manage debt to achieve wealth.

Rich dad was very aware of Nixon’s change in the rules of money in 1971. That is why, in 1972 while I was in Vietnam, rich dad suggested I follow gold in the papers and take note of how the Vietnamese people responded to the changes in money. In Conspiracy of the Rich, I wrote about handing a Vietnamese fruit vendor a $50 bill and having her turn it down. She was my glimpse into the future and the coming crisis with the dollar, a crisis that is still coming.

When I asked my rich dad to explain why I should take classes in real estate investing, he replied, “The dollar is no longer money. The dollar is now debt. If you want to be rich, you need to learn to use debt to grow your wealth.” 

Today, real estate brokers continue to say to Kim and me, “You can’t do that.” They say that even though they see us buying 300- to 500-unit apartment complexes with debt and making millions tax-free. Most real estate agents can’t do what we do because they were educated in the S quadrant, rather than the I quadrant.

Since debt can be lethal, we recommend you start small. Buy several small deals, as Kim did when she bought her first 20 units. Learn how to manage debt and manage real estate.

As most people know, getting into debt is easy. Managing debt is hard.

Regards,

Robert Kiyosaki

Robert Kiyosaki
Editor, Rich Dad Poor Dad Daily

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Robert Kiyosaki

Robert Kiyosaki, author of bestseller Rich Dad Poor Dad as well as 25 others financial guide books, has spent his career working as a financial educator, entrepreneur, successful investor, real estate mogul, and motivational speaker, all while running the Rich Dad Company.

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