Tesla CEO Elon Musk wrote on Twitter on Wednesday that the automaker would no longer accept bitcoin for payment for its cars, citing environmental reasons. Tesla had begun accepting the cryptocurrency just a few weeks prior, posting a long list of instructions and warnings about paying for cars with the cryptocurrency. The company also indicated earlier this year that it had sold about a hundred million dollars worth of the cryptocurrency, but not the majority of its bitcoin holdings.
“Tesla has suspended vehicle purchases using Bitcoin. 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 posted in a text image on Twitter.
“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. We are also looking at other cryptocurrencies that use <1% of Bitcoin’s energy/transaction,” he added.
Predictably, bitcoin values tumbled in the hours after Musk’s Twitter post, with the currency dropping some 12% by late Wednesday evening.
The move drew a mix of reactions from industry observers and cryptocurrency investors, with many pointing out that bitcoin’s high energy usage—reportedly dwarfing that some fairly large countries—was well publicized even before Tesla bought any of the cryptocurrency or had decided to accept it for its cars. Many also pointed out that Elon Musk had hyped bitcoin and several other cryptocurrencies on Twitter, and showed little to no concern for bitcoin’s environmental impact until the middle of this week to take any adverse action.
“He wasn’t concerned about it before and it’s not like there will suddenly be other sources of energy, like solar, that will supply the power overnight. So this is a pointless move for a lot of people as well as Tesla which bought so much of it,” one cryptocurrency trader told Autoweek. “This doesn’t help anyone, and I think a lot of people will feel they were let down. I think it shows people that he’s not treating this seriously.”
Overall the move was a surprise, and followed another cryptocurrency-related development when dogecoin values tumbled during Musk’s appearance on Saturday Night Live days prior. The sudden reversal is likely to leave a bad taste for investors, at least in the short term, especially given Musk’s track record of talking about various cryptocurrencies on Twitter in a positive manner.
However, Musk has not indicated whether Tesla was considering investing in other cryptocurrencies or had planned to accept it for its cars instead of bitcoin.
The cryptocurrency, which has been around for nearly a decade, has long been criticized for requiring substantial amounts of electricity to “mine” and to trade between individuals, seemingly at odds with one of the main touted benefits of electronic money: Reducing paper money’s transaction costs and environmental impact.
Earlier this year Tesla was revealed to have purchased some $1.5 billion worth of bitcoin, at late December 2020 prices, and then sold some $272 million worth of the cryptocurrency in the first quarter, reporting a $101 million “positive impact” in its first quarter earnings. Market observers cited sales of the cryptocurrency and emissions credits, rather than cars, as the major reason for Tesla posting a profit in the first quarter of 2021.
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