The Bitcoin price tumbled by more than 10% on Thursday after Tesla Inc (NASDAQ:TSLA) boss Elon Musk said the electric car maker will stop accepting payments in the cryptocurrency amid concerns over its impact on global carbon emissions.
In a statement posted to Twitter overnight, Musk said while the firm thought cryptocurrency was “a good idea on many levels”, it was “concerned about rapidly increasing use of fossil fuels for Bitcoin mining transactions, especially coal”.
As a result, Musk said Tesla will not be selling any of its current Bitcoin holdings and will only begin using it for transactions when mining the digital currency transitioned to “more sustainable energy”.
He added that the company is also looking at other cryptos that use less than 1% of Bitcoin’s energy per transaction.
Tesla & Bitcoin pic.twitter.com/YSswJmVZhP
— Elon Musk (@elonmusk) May 12, 2021
The news sent the price of Bitcoin down around 11% over the last 24 hours to a one-month low of US$50,806 in early trading in London.
However, while crypto investors are licking their wounds, Tesla’s move is a significant win for critics of Bitcoin’s energy usage, with the amount of power needed to mine the crypto surpassing several countries.
“Bitcoin backers will be wondering where this leaves the future of the cryptocurrency. Environmental matters are an incredibly sensitive subject right now, and Tesla’s move might serve as a wake-up call to businesses and consumers using Bitcoin, who hadn’t hitherto considered its carbon footprint”, said AJ Bell analyst Laith Khalaf.
“Tesla’s decision certainly puts pressure on other big companies who accept Bitcoin to review their practices, because boardrooms will now be wary about getting it in the ear from ESG investors on the shareholder register. This highlights that the long-term adoption of cryptocurrencies by businesses, consumers and investors is still highly uncertain, as Tesla itself has pointed out”, the analyst added.
Bitcoin’s plunge also hit several other mainstream cryptos on the market on Thursday, with Ethereum down 7.8% at US$3,968 while meme-inspired crypto and Musk favourite Dogecoin also dropped 14.7% to US$0.43.