Tesla has suspended the use of bitcoin to purchase vehicles, chief executive officer Elon Musk said in a tweet on Wednesday, citing concerns about the use of fossil fuel for mining the cryptocurrency.
- Mr Musk had said in March that Tesla customers could buy its electric vehicles with bitcoin
- The digital currency is created when high-powered computers compete against other machines to solve complex mathematical puzzles
- At current rates, bitcoin “mining” devours about the same amount of energy annually as the Netherlands did in 2019
Bitcoin, the world’s biggest digital currency, fell more than 7 per cent after the tweet and was trading at $US52,669 ($68,145), its lowest point since early March.
Tesla Inc revealed in February it had bought $US1.5 billion of bitcoin, before it began accepting it as payment for cars in March, driving a roughly 20 per cent surge in the world’s most widely held cryptocurrency.
Mr Musk said Tesla would not sell any bitcoin and intended to use bitcoin for transactions as soon as mining transitioned to more sustainable energy.
“We are also looking at other cryptocurrencies that use <1% of bitcoin’s energy/transaction,” he tweeted.
Mr Musk said in March that Tesla customers could buy its electric vehicles with bitcoin.
The digital currency is created when high-powered computers compete against other machines to solve complex mathematical puzzles, an energy-intensive process that currently often relies on electricity generated with fossil fuels, particularly coal.
At current rates, such bitcoin “mining” devours about the same amount of energy annually as the Netherlands did in 2019, the latest available data from the University of Cambridge and the International Energy Agency shows.
Some investors cast doubt on Tesla’s plans months ago.
“We are of course very concerned about the level of carbon dioxide emissions generated from bitcoin mining,” Ben Dear, chief of Osmosis Investment Management, a sustainable investor managing around $US2.2 billion in assets that holds Tesla stock in several portfolios, said.
Chris Weston, head of research at broker Pepperstone in Melbourne, said Mr Musk’s reaction was a blow to bitcoin but an acknowledgment of the currency’s carbon footprint.
“Tesla has got an image of being environmentally friendly and bitcoin clearly is the opposite of that,” Mr Weston said.
Bitcoin supporters critical of traditional finances
Mr Musk himself is a strong believer in digital currencies while also advocating for clean technology.
“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 said.
In theory, blockchain analysis firms say, it is possible to track the source of bitcoin, raising the possibility that a premium could be charged for green bitcoin.
Stronger climate change policies by governments around the world might also help.
Some bitcoin proponents note that the existing financial system — with its millions of employees and computers in air-conditioned offices — uses large amounts of energy too.
The unconventional CEO has posted numerous comments about cryptocurrencies on Twitter and criticised regular old cash for having negative real interest rates.
“Only a fool wouldn’t look elsewhere,” he said in February.
His cryptic tweets “Doge” and “dogecoin is the people’s crypto” that month kicked off a rally in the cryptocurrency dogecoin — created as a parody on the more mainstream bitcoin and ethereum.
But despite its recent success, dogecoin’s value dropped sharply after Mr Musk called it a “hustle” during his guest-host spot on US comedy TV show Saturday Night Live a few days ago.