The Elon giveth and the Elon taketh away. In case you’re wondering why Bitcoin and other cryptocurrencies have been cratering in the past 24 hours, the Dogefather himself – Elon Musk – has announced Tesla will no longer accept Bitcoin as payment until further notice, citing environmental concerns via Twitter.
“Tesla has suspended vehicle purchases using Bitcoin,” writes Musk.
“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.”
“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 looking at other cryptocurrencies that use <1% of Bitcoin’s energy/transaction.”
The development comes as something of a shock given how the electric automaker only recently purchased US$1.5 billion (AU$1.95 billion) worth of Bitcoin for “more flexibility to further diversify and maximise” returns on cash; in addition to the fact Musk has been one of crypto’s greatest champion, moving markets with nothing more than a couple of characters and perhaps the odd meme – although it certainly seems to be the trend with Elon this past week, beyond Bitcoin alone.
During his appearance on Saturday Night Live, Musk remarked that Dogecoin was a “hustle” in the Weekend Update skit, causing his first crypto-related casualty of the month. The price absolutely plummeted from its all-time high and Dogecoin’s price has still yet to recover approaching the mid-week as investor confidence begins to waver in this regard – despite SpaceX’s best efforts to re-legitimise a meme.
The decision will undoubtedly draw criticism from those who have skin in the game (see: above), although it’s the logical move for a company whose mission statement involves a greener future. Research conducted by the University of Cambridge has indicated Bitcoin mining consumes as much electricity annually as entire countries – exceeding that of both Argentina and Norway – amounting to an untenable rate of 130 Terawatt-hours. That’s approximately 0.6% of the global electricity consumption.
“The environmental impact from mining bitcoins was one of the biggest risks for the entire crypto market,” says Edward Moya, Senior Market Analyst at OANDA.
“Tesla has got an image of being environmentally friendly and Bitcoin clearly is the opposite of that,” says Chris Weston, Head of Research at Pepperstone, Melbourne.
According to CNBC, US$365 billion (AU$472 billion) was wiped off the market. At the time of this writing, Bitcoin is priced at US$50,214 while Dogecoin is sitting at US$0.43.