(Bloomberg) – Tesla Inc. CEO Elon Musk announced that the electric vehicle maker will suspend bitcoin purchases, triggering a precipitous drop in the value of the cryptocurrency.
This Wednesday, in a post on Twitter, Musk cited concerns about “the increasing use of fossil fuels for bitcoin mining and trading.” The move comes after Tesla revealed in February that it had bought $ 1.5 billion worth of the cryptocurrency, in addition to planning to accept it as payment.
As a recently added member of the S & P500 stock index, Tesla’s surprise announcement added legitimacy to cryptocurrency as an increasingly acceptable form of payment and as an investment.
Tesla’s addition of bitcoin to its balance sheet was the most obvious catalyst during this year’s rally in the digital currency. The cryptocurrency was up 16% that day, the biggest intraday gain since Covid-19 sparked financial market volatility in March 2020.
Optimism grew after Mastercard Inc., Bank of New York Mellon Corp, and other firms moved to make it easier for customers to use crypto, fueling the general resurgence that took bitcoin from roughly $ 29,000 late last year to nearly $ 65,000 on April 14. After Musk’s latest tweet, the token plummeted to 4.4% at around $ 52,000.
Bitcoin mining consumes 66 times more electricity than at the end of 2015, and the carbon emissions associated with it are likely to face increasing scrutiny, according to a recent report by Citigroup Inc.
But Musk’s tweet caught many in the crypto community by surprise, including Nic Carter, a partner at Castle Investment Management and a leading voice among advocates of bitcoin’s energy use.
“Surely you did your due diligence before accepting bitcoin?” Carter said. “It is very strange and confusing to see this change so fast.”
It is unclear what prompted the decision. Musk and Zachary Kirkhorn, Tesla’s chief financial officer, did not respond to an email inquiry seeking comment. After Musk posted the tweet, the company’s website still had information on how to make payments through bitcoin.
Original Note: Bitcoin Falls After Musk Halts Tesla Purchases With Currency (1)
For more articles like this, please visit us at bloomberg.com
Subscribe now to stay ahead with the most trusted business news source.
© 2021 Bloomberg LP