Bitcoin and Elon Musk: Tesla CEO announces that they will no longer accept cryptocurrency and it suffers a sharp drop

With his tweets he made bitcoin soar more than once and with a tweet Elon Musk made this Wednesday that it plummeted more than 10%.

The South African businessman announced on Twitter that Tesla stops accepting bitcoin as a form of payment for its electric vehicles due to its alleged environmental impact.

“We are concerned about the rapid increase in the use of fossil energy for bitcoin mining and transactions, especially coal,” he said in a statement posted on Twitter.

“Cryptocurrencies are a good idea … but it can’t be at great cost to the environment,” Musk noted, backing off previous comments.

And is that his statements come less than two months after Tesla announced that it would accept bitcoin, which then sparked criticism from some environmentalists and investors.

In February, the electric vehicle maker further revealed that it had bought $ 1.5 billion worth of bitcoin, the market’s top cryptocurrency, bringing it to a record price.

Calm worries or a “play” to destabilize?
Market analysts see the decision as an attempt by Tesla to allay the concerns of investors who are focused on climate change and sustainability.

“Environmental, social and corporate governance (ESG) criteria are now a main motivation for many investors. Tesla, being a company focused on clean energy, may want to do better in the environmental area of ​​ESG. “Julia Lee of Burman Invest tells the BBC.

“However, someone cynical might suggest that this is just another move by Elon Musk to influence the crypto market, as he has done on so many other occasions,” she adds.

Last month, Tesla announced that its profits in the first three months of the year amounted to $ 438 million, $ 16 million more than the previous year, thanks to the fact that it had sold bitcoin and environmental regulation credits.

Musk has been one of the highest-profile proponents of cryptocurrencies, often tweeting about bitcoin and dogecoin.

Musk’s comments on Twitter in recent months helped turn dogecoin, which started as a kind of social media joke, into the world’s fourth-largest cryptocurrency.

What are the environmental concerns about bitcoin?

Bitcoin is created by miners who use powerful computers to compete with each other and solve complex mathematical puzzles.

It is a process that requires a large source of energy, which can be electricity generated by fossil fuels, particularly coal.

The dominance of Chinese bitcoin miners and a lack of motivation to switch from cheap fossil fuels to other more expensive forms of renewable energy means there are few solutions to concerns about bitcoin’s environmental repercussions.

China accounts for more than 75% of bitcoin mining in the world, according to a recent study, which concluded that the cryptocurrency’s carbon footprint is as large as that of 10 major cities in the Asian country.

That’s due to the fact that those bitcoin miners tend to use electricity produced by fossil fuels for much of the year, switching only to renewable energy – generally hydropower – during the summer rainy months.

However, proponents of bitcoin stress that the traditional financial system, with its millions of workers and computers in air-conditioned offices, also uses large amounts of electricity, which commonly comes from fossil fuels.