Bitcoin crashed on 12th May following Elon Musk’s announcement that Tesla would no longer accept vehicle purchases in the cryptocurrency.
Musk, CEO of the electric car company, tweeted that “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.
“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.”
The tweets directly result in Bitcoin falling from a daily of around $54,772 to $522,30. The tweets had an impact on the price of other leading cryptocurrencies, with all but one of the top 10 sharply down on Thursday.
Change of Tone
The comments came as a surprise to many considering that Musk has advocated for the cryptocurrency throughout the year.
It was only back in March that the Tesla CEO tweeted – in the middle of the night – that customers would now be able to buy the company’s cars with Bitcoin. He also claimed that people outside the US would be able to do the same later in the year.
Musk went on to state that Tesla wouldn’t be converting the Bitcoin received into a fiat currency:
“Tesla is using only internal & open source software & operates Bitcoin nodes directly. Bitcoin paid to Tesla will be retained as Bitcoin, not converted to fiat currency,”
For some time now, Musk’s tweets have been seen to have a direct impact on the price of Bitcoin and other cryptocurrencies, such as Dogecoin.
Tesla invested in Bitcoin and was reported to have made around $1 billion after the price of the cryptocurrency almost doubled over the next 10 weeks.
There have been suggestions that the US Securities and Exchange could become involved following Musk’s latest comments.
He had already been investigated back in February following his posts about Dogecoin.
Musk had frequently referenced the cryptocurrency on his Twitter, including changing his Twitter profile to read “CEO of Dogecoin”. This week, he announced that SpaceX will launch a mission in 2022 that will be paid for in Dogecoin.
Must was also forced to resign as Tesla chairman in 2018 following misleading tweets about Tesla stock.
Environmental Impact of Bitcoin
While Must’s comments came as a shock to many Bitcoin traders and investors, he’s not the only figure to air concerns about the cryptocurrency’s environmental impact.
Bitcoin – now the world’s ninth most valuable asset, requires nearly as much energy as Argentina.
Charles Hoskinson, CEO of cryptography firm IOHK, has said that “Bitcoin’s energy consumption has more than quadrupled since the beginning of its last peak in 2017 and it is set to get worse because energy inefficiency is built into bitcoin’s DNA.”