Bitcoin Tanks After Elon Musk Says Tesla Stops Accepting It Due To Carbon Energy Use
Elon Musk, who has become a volatile force in the cryptocurrency universe, said Tesla is no longer accepting Bitcoin as payment for purchases of its electric vehicles owing to the excessive amount of carbon-based energy it uses. Bitcoin plunged following his comments.
“We are concerned about rapidly increasing use of fossil fuels for Bitcoin mining and transactions, especially coal, which has the worst emissions of any fuel,” Musk tweeted on Wednesday afternoon. “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.”
While Tesla isn’t going to accept Bitcoin as payment, the company’s billionaire CEO said it also won’t be selling holdings in the cryptocurrency and still plans to use “it for transactions as soon as mining transitions to more sustainable energy.”
Bitcoin dropped 17% to $47,256.504 at 1:05 a.m. London time early Thursday.
Mining its uses “more electricity than Argentina” according to recent BBC report because it needs vast amounts of computing power to continuously log and verify all transaction data to the bitcoin blockchain.
The sudden move is a curious one since Tesla’s recent $1.5 billion Bitcoin investment triggered a surge in the currency’s value. It also helped the carmaker report a first-quarter project this year, owing to the $101 million gain it reported from selling 10% of its Bitcoin holdings. Musk has also made numerous comments that pumped up and undercut Dogecoin, a cryptocurrency that started as a joke.
Musk said the company is looking at other cryptocurrencies that “use “<1% of Bitcoin’s energy/transaction,” without identifying specific alternatives.
Tesla disclosed its Bitcoin investment in its annual 10-K filing on Feb. 8, 2021, saying it “may acquire and hold digital assets from time to time or long-term. 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.”
During Tesla’s first-quarter results call on April 26, CFO Zachary Kirkhorn said he believed the company’s investment had “proven to be a good decision” owing to the “how much liquidity there is in the Bitcoin market.”
“We do believe long term in the value of Bitcoin,” he said. “So it is our intent to hold what we have long term and continue to accumulate bitcoin from transactions from our customers as they purchase vehicles.”
Tesla shares fell 4.4% to $589.89 in Nasdaq trading on Wednesday. They’ve declined 16% this year.