Elon Musk suspends Tesla purchases using Bitcoin, cites environmental concerns
In an abrupt u-turn, Elon Musk announced Wednesday that Tesla has suspended vehicle purchases using Bitcoin citing environmental concerns. He highlighted the rapidly increasing use of fossil fuels for bitcoin mining. And as was to be expected, the popular cryptocurrency plunged about 5% after the announcement.
In February, Tesla in its SEC filing revealed it had bought $1.5 billion worth of bitcoin and it may invest in more bitcoin or other cryptocurrencies in the future. The company had also declared that it would start accepting bitcoin as a payment method for its electric cars.
Taking to microblogging platform Twitter, Musk said cryptocurrency is a good idea on many levels and we believe it has a promising future, but this cannot come at great cost to the environment. “Tesla will not be selling any Bitcoin and we intend to use it for transactions as soon as mining transitions to more sustainable energy,” he said. “We are also looking at other cryptocurrencies that use <1% of Bitcoin’s energy/transaction.”
Tesla & Bitcoin pic.twitter.com/YSswJmVZhP
— Elon Musk (@elonmusk) May 12, 2021
Bitcoin mining, as per a recent Citigroup Inc. report, consumes 66 times more electricity than it did back in late 2015, and the carbon emissions associated with it will likely face increasing scrutiny. Cathie Wood’s Ark Investment Management LLC published a report last month saying cryptocurrency mining can drive investment in solar power and make more renewable energy available to the grid.
As a result of Musk’s u-turn, the largest cryptocurrency dropped as much as 15% in Asian trading, sliding well below $50,000. It was down about 8% to $50,190 as of 10.53am in Tokyo. Moreover, there were reports of outages at digital-token exchanges as people rushed to sell.
Musk said Tesla plans to hold rather than sell the bitcoin it already has, and would be looking into other cryptocurrencies that require less energy for transactions. This decision comes as a big blow to the cryptocurrency market and enthusiasts as Musk has been very much a public fan of bitcoin and dogecoin, tweeting and joking about these with his millions of Twitter followers over the past year.
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However, Tesla’s owner has not been the only one supportive of cryptocurrency. Mastercard Inc., Bank of New York Mellon Corp. and other firms moved to make it easier for customers to use cryptocurrencies, fuelling the mainstream resurgence that took bitcoin from about $29,000 at the end of 2020 to as high as $65,000 in April.
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