Elon Musk revealed on Twitter that Tesla would pause accepting bitcoin as payment for its product as a consequence of its high energy consumption.
Tesla CEO Elon Musk has roiled the crypto markets after announcing that Tesla would stop accepting bitcoin as payment for its vehicles. The reason cited was that bitcoin mining consumed far too much energy and was damaging the environment. The market responded by turning red, with bitcoin dropping around 16% in just a few hours.
Specifically, the tweet states that Tesla is concerned about the increasing use of fossil fuel, especially coal. While the note does state the benefits of cryptocurrencies, Musk stated that it should not come at the cost of the environment.
Tesla will continue to keep its bitcoin holdings and resume bitcoin transactions once mining transitions to renewable energy. The company will also look for cryptocurrencies that consume less than <1% of bitcoin’s energy/transaction.
The news is a quick change of heart from one of the market’s strongest high-profile supporters. Musk has offered support for cryptocurrencies as assets several times and is most well-known for his thoughts on Dogecoin.
Some in the market have complained about how Musk’s influence has a seismic effect on the market, whether good or bad. His comments on Dogecoin have greatly bumped the price up, while the recent bitcoin news has tanked the market as a whole. The complaint is that Musk has enough clout to influence the market, which is a questionable matter on the whole.
However, while bitcoin does require a high amount of energy for mining, an increasing number of entities are moving towards renewable sources of energy. Furthermore, the data on how badly bitcoin is affecting the environment isn’t entirely conclusive.
Reports on bitcoin’s renewable energy usage vary, with some saying it is as high as 70%, while others say it is 39%. The point is, the industry is making note of these concerns and working towards going green.
BTC crashes below $50k
Naturally, the market has taken a huge beating from the change of face from one of the most prominent market entrants in recent times. In total, the market lost about $365 billion following the announcement, though it has recovered slightly since.
Tesla only began accepting bitcoin payments about two months ago and the decision to stop is a quick U-turn that has tanked the market. For the first time in months, the price of bitcoin had crashed to below $50,000, and it currently sits at roughly $51,000.
Several figures in the cryptocurrency space chimed in with their thoughts, and some of them seemed to chide Musk for being seemingly ignorant. The argument about bitcoin’s energy consumption has been a thorn in the market’s side for a while now.
Blockstream CSO and Pixelmatic CEO Samson Mow called the comments “uneducated,” even going so far as to say that he would never buy another Tesla product. Cameron Winklevoss was far more friendly with his response, simply saying that bitcoin is pushing the renewable energy industry forward and expecting Musk to refresh his position.