The world’s leading electric vehicle maker Tesla announced to stop accepting bitcoin payments for its cars after two months it had started to accept it. Bitcoin fell more than 10% after Musk tweeted his decision to suspend the bitcoin payment option on Wednesday. Other cryptocurrencies, including ethereum, also fell before regaining some ground in Asia trade. Tesla CEO cited long-brewing environmental concerns for a swift reversal in the company’s position on the bitcoin payment option.
Environmentalists thrash bitcoin over excessive energy consumption.
The use of bitcoin to buy Tesla’s electric vehicles had highlighted a dichotomy between Elon Musk’s reputation as an environmentalist and the use of his popularity and stature as one of the world’s richest people to back cryptocurrencies. Since bitcoin’s recent massive rally, environmentalists worldwide have been increasingly critical about the way bitcoin is “mined” using vast amounts of electricity generated with fossil fuels. Tesla CEO said he backed that concern, especially the use of “coal, which has the worst emissions of any fuel.”
Tesla would continue to retain its bitcoin holdings.
“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 tweeted. Tesla shares fell 1.25% after hours. Earlier this year, Tesla revealed that it bought $1.5 billion of bitcoin before accepting it as payment for cars in March, driving a roughly 20% surge in the cryptocurrency. Tesla would retain its bitcoin holdings with the plan to use the cryptocurrency as soon as mining transitions to more sustainable energy sources, Musk said. At current rates, bitcoin “mining” takes up about the same amount of energy annually as the Netherlands did in 2019, as per the latest available data from the University of Cambridge and the International Energy Agency.