Elon Musk has thrown the cryptocurrency markets into turmoil once again as he rescinds bitcoin payments for Tesla vehicles.
Less than two months ago, Musk announced that Tesla would accept payment in bitcoin. Now he’s done an about-turn.
“Tesla has suspended vehicle purchases using bitcoin,” Musk tweeted. “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.”
Bitcoin is created when high-powered computers compete against other machines to solve complex mathematical puzzles. It’s this energy-intensive process, that often relies on electricity generated with fossil fuels, that Musk is calling out.
“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,” according to Musk.
“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 less than 1% of bitcoin’s energy/transaction.”
But there could be more behind the move, which sent bitcoin prices down as much as 15%, according to Nigel Green, chief executive of deVere Group.
“Just a few months ago, to much fanfare, Musk announced that his company Tesla had bought $1,5-billion worth of bitcoin and that it would accept it as payment for cars. The move was one of the reasons the cryptocurrency’s price has soared this year.
“All of a sudden, he’s not so keen due to environmental concerns. But why now?” Green asks. “Those issues surrounding the environmental impact have not come up in the last few months? Did Musk seriously not know about them before he bought $1,5-billion bitcoin?”
Green adds that environmental matters do urgenlty need to be addressed about bitcoin mining. “Any action to support the further transition to fully using sustainable energy must be championed – it is something I whole-heartedly support.
“According to research 76% of cryptocurrency miners currently use electricity from renewable energy sources as part of their energy mix. Which begs the question: why, with all his immense resources and power is Musk not able to ensure that all his bitcoin is mined this way?
“In addition, why is he not using this influence to further advance and incentivise renewable energy for cryptocurrencies – something that Twitter founder Jack Dorsey has previously tweeted about and with which Musk agreed on the social platform.”
Green speculates that Musk is a well-known contrarian. “He likes to go against the crowd in a high-profile way. Is his waning interest in Bitcoin at a time when huge amounts of institutional investment from major Wall Street banks is pouring in, part of this?”