Chief Executive Elon Musk announced on Wednesday, Tesla will no longer accept bitcoins to purchase the car, citing long-standing environmental concerns for a rapid reversal of the company’s position on cryptocurrency.
Less than two months after Tesla accepted the world’s largest digital currency for payment, bitcoin fell more than 10% after Musk tweeted its decision to suspend its use. Other cryptocurrencies, including Ethereum, fell before gaining some ground in Asia trade.
Tesla’s use of bitcoin to purchase electric vehicles had highlighted Musk’s reputation as an environmentalist and the discotomy as one of the richest people in the world, His popularity and stature use as one of the richest people in the world to return cryptocurrency.
Some Tesla investors, along with environmentalists, are increasingly critical of the way in which bitcoin has been “mined” using large amounts of electricity generated with fossil fuels. Musk said that on Wednesday he supported that concern, in particular, “the use of coal, which has the worst emissions of any fuel”.
Musk further tweeted, “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 shares fell 1.25% after hours.
Tesla revealed in February that it had bought $ 1.5 billion worth of bitcoin, before accepting it as a payment for cars in March, increasing cryptocurrency by nearly 20% increase.
Musk said Tesla would retain its bitcoin holdings with plans to use cryptocurrency as soon as the mining transition to more sustainable energy sources.
Bitcoin is created when high-powered computers compete against other machines to solve complex mathematical puzzles, an energy-intensive process that currently often relies on fossil fuels, especially coal-fired electricity
Ben Dear, CEO of Osmosis Investment Management, said, “We’re certainly very concerned about the level of carbon dioxide emissions generated from bitcoin mining. In February, immediately after Tesla’s bitcoin holdings went public. Osmosis is a permanent investor who Manages assets of approximately $ 2.2 billion which holds Tesla stock in several portfolios.
“The environmental impact from bitcoin mining was one of the biggest risks to the entire crypto market,” said Edward Moya, a senior market analyst at currency trading firm OANDA. “In the last few months, everyone disregarded the news that bitcoin uses more electricity than Argentina and Norway”.