Tesla CEO Elon Musk sent cryptocurrency prices plunging last Wednesday. Prices of popular cryptocurrencies came crashing by as much as 17% after he announced that Tesla bitcoin prices after tweeting that the EV carmaker will stop accepting Bitcoin as payment.
Elon Musk’s Tweet
The tweet, sent early evening explains Tesla’s decision to distance themselves from crypto. It read: “Tesla has suspended vehicle purchases using Bitcoin. We are concerned about the rapidly increasing use of fossil fuels for Bitcoin mining and transactions, especially coal, which has the worse emissions of any fuel.”
“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 will not be selling any Bitcoin and we intend to use it for transactions as soon as mining transitions to more sustainable energy. We are also looking at other cryptocurrencies that use <1% of Bitcoin’s energy /transaction.”
Cryptocurrency Prices Down By $365 Billion
At around 6 pm Eastern Time, Musk sent his infamous tweet as the total cryptocurrency market totaled $2.43 trillion. By 8:45 pm EST, the cryptocurrency market lost around $365.85 billion, dropping to $2.06 trillion. Since then, the crypto market attempted a recovery. By 9 pm EST, the market recovered at least $200 billion.
In particular, Bitcoin received the brunt of the pullback. After Musk’s tweet, bitcoin prices dropped by 17% and dropped below $50,000 for the first time since April 24. Despite the crash, the popular cryptocurrency price managed to return above $50,00. As of 2:30 pm EST, Bitcoin is trading at $50,897.70. More importantly, Bitcoin remains 100 times higher than their trading price five years ago.
Why Is Tesla Dropping Bitcoin As Payment?
Musk's announcement came just three months after Tesla announced they will start accepting Bitcoin as payment for their electric vehicles. In addition, Tesla also announced that the company invested around $1,5 billion worth of bitcoin.
Now, Musk and Tesla made a surprise U-turn. He said that the cryptocurrency is very energy-intensive. The mining process, where cryptocurrency comes from, involved many powerful computers. These computers try to solve math equations that require lots of computing power. Whichever computer helped solve the equation receives a share of the bitcoin generated. However, Musk did say he remains open to accepting cryptocurrencies with lower energy requirements.
Bitcoin Mining Uses A Lot of Fossil Fuel
Tesla vehicles are known all over for running on batteries instead of fossil fuel. It became ironic for Tesla to support a currency that uses a lot of fossil-fuel energy. Even as Tesla touted its aim of fighting climate change, its decision to carry bitcoin came as a surprise.
However, many cryptocurrency followers say that crypto mining doesn’t choose where it draws its power. Many of its miners use computers powered by renewable energy. In fact, Bitcoin mining actually kept fossil fuel power plants in production when they would otherwise be inactive, adding to the world's carbon footprint.
Musk Also Crashed Dogecoin
Musk also figured prominently in another instance of crashing cryptocurrency prices last week. During a hosting stint in ”Saturday Night Live,” Musk jokingly agreed that Dogecoin is a “hustle” when asked by a cast member. The meme-based cryptocurrency saw its value plunge immediately after Musk’s remarks.
Do you support the wider use of cryptocurrencies such as Bitcoin? Do you think that they will make good substitutes for paper money and coins in the future? Let us know what you think about cryptocurrency and cryptocurrency prices by posting your comments below.
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