Tesla Inc (TSLA.O) will no longer accept bitcoin for car purchases, Chief Executive Officer Elon Musk said on Wednesday, citing long-standing environmental concerns over the company's rapid transition to cryptocurrency.
Bitcoin fell more than 10% after Musk posted on Twitter his decision to suspend its use, less than two months after Tesla began receiving the world's largest payment. Other cryptocurrensets, including ethereum, also crashed before regaining some of the Asian trading space.
The use of bitcoin to buy Tesla electric cars has highlighted the discrepancy between Musk's reputation as natural and the use of his popularity and reputation as one of the richest people in the world to recoup cryptocurrencies.
Some Tesla investors, as well as environmentalists, have been highly critical of the way bitcoin "mines" using a lot of petrol.
Musk said Wednesday he supported those concerns, especially the use of "coal, which emits more fuel."
"Cryptocurrency is a good idea on many levels and we believe it has a promising future, but this will not be too costly for the environment," he wrote in a tweet. Tesla shares fell 1.25% hours later.
Tesla revealed in February that it had bought $ 1.5 billion of bitcoin, before accepting it as a car payment in March, driving a 20% increase in cryptocurrency.
Tesla will retain its capture with a cryptocurrency strategy as soon as the mining transition has gone on to a growing power source, Musk said.
Bitcoin is created when high-power computers compete with other machines to solve complex mathematical puzzles, a very powerful process that now tends to rely on gas-fired electricity, especially coal.
At current rates, such bitcoin "mines" consume almost the same amount of energy every year as did the Netherlands in 2019, the latest data available from the University of Cambridge and the International Energy Agency show.
Analysts say Musk's face was inevitable.
"The environmental impact of mining bitcoins has not been a major threat to the entire crypto market," said Edward Moya, a senior market analyst at financial services company OANDA.
Meltem Demirors, chief operating officer of digital manager CoinShares Group, said Tesla was unlikely to sell more cars, if any, using bitcoin and backflip which produced better information while simplifying payment processes.
"Elon received a lot of questions and criticism and this statement allowed him to satisfy critics while keeping bitcoin in his balance," Demirors said.
Mark Humphery-Jenner, a professor of finance at the University of New South Wales, said he was "deeply concerned" about the decision-making process by Tesla's management.
Musk did not say in his Twitter posts whether there were cars purchased with bitcoin and Tesla did not immediately respond to a request for comment.
CRYPTOCURRENCY SUPPORT
Some bitcoin proponents point out that the existing financial system - with millions of its employees and its computers in cool offices - is using a lot of energy as well.
Musk also said he always strongly believes in cryptocurrensets.
"We are also looking at other payments that use <1% of bitcoin's power / activity," he wrote on Twitter on Wednesday.
Just a day earlier, Musk had tested Twitter users to see if Tesla should accept dogecoin, the money he helped turn it into a valuable joke.
He announced on Sunday that his rocket-selling company SpaceX would accept dogecoin as payment for launching the monthly goal next year - just hours after sending cryptocurrency money down when he called it a "riot" during a guests' celebration on the "Saturday Saturday" comedy show.
CHINESE IDOMINANCE
The domination of Chinese bitcoin miners and the lack of motivation to exchange cheap oil for more expensive minerals could mean that there are several quick fixes to the cryptocurrency issuance problem.
Chinese miners account for about 70% of bitcoin production, data from the University of Cambridge's Institute for Alternative Finance. They tend to use renewable energy - especially electricity - during the rainy summer months, but fossil fuels - especially coal - all year round.
Beijing officials are conducting a check on the data centers involved in cryptocurrency mining to better understand their impact on energy use.
In theory, blockchain analytics firms say that it is possible to trace the source of bitcoin, increasing the likelihood that payments could be charged with raw bitcoin.
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