TESLA Motors has stopped accepting Bitcoin as payment for its cars, less than two months after announcing it is happy to sell vehicles using the cryptocurrency.
True to form, celebrity CEO Elon Musk took to Twitter to make the announcement, citing environmental concerns about the “mining” of Bitcoin, the highly energy-consuming process involving solving complex mathematical equations on computers, through which more of the cryptocurrency enters circulation.
In a statement, Musk said: “Tesla has suspended vehicle purchases using Bitcoin. We are concerned about the rapidly increasing use of fossil fuels for Bitcoin mining and transactions, especially coal, which has the worst emissions of any fuel.
“Cryptocurrency is a good idea on many levels and we believe it has a promising future, but this cannot come at a great cost to the environment.”
He also announced that Tesla would not be selling any of its Bitcoin horde until mining becomes more environmentally friendly, and that the car maker was seeking an alternative cryptocurrency that consumes less than 1% of the energy Bitcoin uses per transaction.
This morning, he added a reply to the tweet noting an “insane” rise in Bitcoin’s energy usage over the past few months.
— Elon Musk (@elonmusk) May 13, 2021
It is estimated by the Bitcoin Energy Consumption Index, set up by economist Alex de Vries, that the energy used by Bitcoin is roughly equivalent to that used by the Netherlands.
De Vries also notes that Bitcoin’s largest issue may not even be its energy consumption, but rather that a lot of the mining of Bitcoin takes place in countries that rely heavily on coal for power, like China. It is estimated that Chinese miners account of 70% of Bitcoin production.
Tesla invested heavily in Bitcoin in the early months of 2021, ploughing $1.5bn into the cryptocurrency in January — an investment that is thought to have made it more profit than all of its 2020 car sales combined.
It then began accepting Bitcoin as payment for cars in the US in March, with Musk promising that the option would be rolled out to other countries by 2021.
Since then, however, Tesla’s stock has lost more than a third of its value, which has been attributed partly to its decision to align itself with unstable cryptocurrencies as well as the rollout of new electric cars from traditional car manufacturers such as Audi, Porsche and Hyundai.
After Musk’s announcement last night, the value of Bitcoin dropped by 13%, while the value of other cryptocurrencies including Ethereum and Litecoin also plummeted. The value of Tesla shares also declined in after-hours trading following the announcement, by 1.3%,
The often-capricious CEO has been criticised for the effect he has on cryptocurrencies. On Saturday, he hosted long-running American sketch show Saturday Night Live and made fun of his favoured cryptocurrency, Dogecoin, joking in one segment that it was a “hustle”.
The value of the cryptocurrency fell 20% immediately after the show aired, and continued to fall on Sunday morning to less than two thirds of its former value.
On Sunday evening, however, he announced that his SpaceX rocketship company would launch a mission next year funded by Dogecoin.
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