Elon Musk’s Bitcoin U-turn: Tesla stops car purchases using Bitcoin; cryptocurrency sinks, Tesla shares fall

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Updated: May 13, 2021 12:23 PM

While Tesla has now suspended transactions using Bitcoin, the company will explore the use of other cryptocurrencies that use less than 1% of Bitcoin’s energy per transaction

Tesla share price, Elon MuskEarlier this year, Tesla bought $1.5 billion of Bitcoin, 10% of which it later sold on the open market. Tesla holds the remaining amount of Bitcoin on books. (Image: REUTERS)

Elon Musk has once again fueled a fire in the cryptocurrency world, but this time the Tesla CEO has sent Bitcoin prices tumbling down. The second richest man in the world took cryptocurrency bulls by surprise on Thursday as he suspended purchase of Tesla cars using Bitcoin. This move by Elon Musk sent Bitcoin tumbling as much as 15% during the day to hit a low of $46,000, before recovering some losses later on. Elon Musk said he was suspending vehicle purchases using bitcoin due to environmental concerns.

“Tesla has suspended vehicle purchases using Bitcoin. We are concerned about rapidly increasing use of fossil fuels for Bitcoin mining and transactions, especially coal, which has the worst emission of any fuel,” Elon Musk said on Twitter. However, Musk assured that he has not made a U-turn on his views on cryptocurrencies in general. “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,” he added. Earlier this year, Tesla bought $1.5 billion of Bitcoin, 10% of which it later sold on the open market. Tesla holds the remaining amount of Bitcoin on books.

While Tesla has now suspended transactions using Bitcoin, the company will explore the use of other cryptocurrencies that use less than 1% of Bitcoin’s energy per transaction, Elon Musk said. Reports suggest that the annual carbon footprint of Bitcoin is almost equal to that of Slovakia. Bitcoin did fall on Wednesday but recovered some losses to sit at $50,592. Despite the fall, the cryptocurrency is still up 431% in the last one year.

Also Read: Elon Musk pushes Dogecoin’s price down; crypto declines to 50 Cents after Tesla chief explains what it is

Meanwhile, Tesla share price closed 4.42% lower on Wednesday at $589 apiece. Tesla was not alone in the southward march. Microstrategy, another listed entity that holds Bitcoin on its balance sheet, tanked 6.08%. Newly listed Coinbase also fell 6%. However, Elon Musk has said that Tesla will not sell any of its Bitcoin holdings; instead, it plans to use the cryptocurrency for transactions as soon as mining becomes more sustainable.

Also Read: Elon Musk sounds caution on cryptocurrency: ‘Don’t risk life savings, invest with caution’

Earlier last week, Elon Musk was seen cautioning people about the use of cryptocurrencies when he said that people should not be putting their life savings into the asset. “Cryptocurrency is promising, but please invest with caution,” Elon Musk had tweeted. Musk, who holds a large following among retail investors has also been vocal about his support for Dogecoin — a cryptocurrency that had started as a joke. However, on Saturday, appearing on late-night comedy sketch show Saturday Night Live (SNL) Elon Musk termed Dogecoin as a “hustle” which sent the Dogecoin price down 22%.

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