Elon Musk, a volatile figure in the cryptocurrency world, announced that Tesla would no longer allow Bitcoin as payment for its electric cars due to the high volume of carbon-based energy it consumes. Bitcoin fell precipitously in the aftermath of his remarks.
Musk Tweeted that he is concerned about the rapidly growing usage of fossil fuels for Bitcoin mining and transactions, especially coal, which emits the most pollutants of any fuel. He also added that cryptocurrency is a positive thing on several fronts and has a bright future, it cannot come at the expense of the environment.
Although Tesla would not accept Bitcoin as payment, the company’s billionaire CEO stated that the firm would not sell its Bitcoin assets and would continue to use the cryptocurrency for transactions as soon as mining moves to more renewable resources.
At 1:05 a.m. London time on Thursday, Bitcoin fell 17% to $47,256.504.
According to a recent BBC story, mining consumes more energy than Argentina since it requires massive quantities of processing power to constantly register and validate all bitcoin transaction details on the bitcoin blockchain.
The abrupt change is puzzling in light of Tesla’s latest $1.5 billion investment in Bitcoin, which caused an increase in the currency’s valuation. Additionally, it aided the carmaker in reporting a first-quarter profit this year, owing to a $101 million gain on the sale of 10% of its Bitcoin shares. Musk has also made various tweets praising and criticizing Dogecoin, a cryptocurrency that began as a joke.
Musk’s reversal on Bitcoin came a day after he questioned his Twitter followers whether Tesla could support “Doge”–just days after joking on Saturday Night Live that the Shiba-Inu-themed cryptocurrency was a “hustle.”
Musk mentioned that the firm is investigating alternate cryptocurrencies that use less than 1% of Bitcoin’s energy/transactions, without elaborating.
Tesla announced its Bitcoin investment in its annual 10-K report on Feb. 8, 2021, noting that the company can acquire and retain digital assets on a temporary or long-term basis. Additionally, we anticipate taking bitcoin as payment for goods in the foreseeable future, which will be subject to relevant legislation and on a restricted basis initially that we can or may not liquidate upon receipt.
On April 26, during Tesla’s first-quarter earnings call, CFO Zachary Kirkhorn said that the company’s investment had proven to be a smart one due to the amount of liquidity in the Bitcoin sector.
He said that he trusts in the long-term value of Bitcoin. As a result, our intention is to keep everything we have for the long term and to begin accumulating bitcoin by consumer purchases as they buy vehicles.
Tesla stock dropped 4.4 percent to $589.89 in Wednesday Nasdaq trade. They have decreased by 16% this year.