What just happened? Bitcoin's value fell by almost 17% a few hours ago, and it's all Elon Musk's fault. The second-richest person in the world has suspended Tesla customers' ability to use the cryptocurrency when purchasing one of the company's EVs due to concerns over its impact on the climate.
Tesla's embracing of Bitcoin has helped pump the price even higher this year. The crypto reached an all-time high of $44,000 back in February when the automaker revealed it had invested $1.5 billion in Bitcoin and would soon accept it as payment. In March, Tesla started allowing US customers to pay for a Tesla using BTC.
But Musk has just done a U-turn, tweeting that Tesla is suspending vehicle purchases using Bitcoin, citing the environmental damage caused by mining. "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," Musk wrote. "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 & Bitcoin pic.twitter.com/YSswJmVZhP— Elon Musk (@elonmusk) May 12, 2021
Musk added that Tesla would not be selling any of its Bitcoin and intends to use it as soon as mining transitions to more sustainable energy—whenever that might be.
Interestingly, Musk added that "We are also looking at other cryptocurrencies that use <1% of bitcoin's energy/transaction." New crypto Chia positions itself as a greener alternative to other cryptos as it is "farmed" using drive space rather than mined with computing power, but we recently heard it can ruin a 512GB SDD in just over a month and is causing HDD/SDD shortages—not very environmentally friendly. Still, it's better than Bitcoin, which uses more energy each year than the whole of Sweden and could have a carbon footprint the same size as that of London.
Musk's Tweet saw Bitcoin's price tumble around 17% to $46,000, its lowest point since March 1. The rush to sell caused outages at some exchanges. It has rebounded slightly to ~$51,000, but that's still around $5,000 lower than before the CEO's post.