Tesla stops accepting bitcoin, citing ‘great cost to the environment.’ The cryptocurrency’s value sank. - The Washington Post

The value of bitcoin suddenly dipped on Wednesday, sapping billions from the cryptocurrency market.

The apparent cause? An Elon Musk tweet.

The Tesla chief announced Wednesday that the electric car company would no longer accept bitcoin, reversing course three months after he pledged to start taking the cryptocurrency as payment. Musk also said Tesla would not sell its own bitcoin until the currency’s “miners” turned to greener sources of energy to power the computers needed to process transactions and create new coins.

“We are concerned about rapidly increasing use of fossil fuels for Bitcoin mining and transactions, especially coal, which has the worst emissions of any fuel,” Musk said in a statement. “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.”

On Wednesday, the cryptocurrency market again reacted swiftly to Musk’s reversal.

When he posted a statement on Twitter around 3:06 p.m. in California, the value of a bitcoin was about $54,600. Two hours later, it hit its low point for the day at $46,980, according to data from Coinmarketcap.com. The value recovered a bit, rising to a little over $50,000 by the end of the day.

Although the dip caused some people to sell, many bitcoin defenders pointed out that the currency has seen steep crashes in the past — including at the beginning of March and April — and has recovered. In fact, bitcoin’s value surpassed $50,000 for the first time in February amid a record climb that started in 2020.

Musk has been dabbling in cryptocurrencies for some time, and his tweets and public statements have been known to trigger fluctuations in the market.

The tech executive dubbed himself the “Dogefather” because of his advocacy for Dogecoin, another cryptocurrency — named after the Shiba Inu “doge” meme — that began as a joke but has since grown rapidly in value.

Hosting Saturday Night Live on May 8, Tesla CEO and SpaceX founder Elon Musk poked fun at himself in an episode airing on the eve of Mother's Day. (Joshua Carroll/The Washington Post)

When he hosted “Saturday Night Live” last week, Musk joked about his relationship to the alternative cryptocurrency, calling Dogecoin a “hustle.” Immediately, the value tanked, sinking from 65 cents to 44 cents overnight.

Even after the drop, Musk has continued to talk about Dogecoin. On Tuesday, he asked his Twitter followers if Tesla should accept the alternative coin from customers. More than three-quarters of the 3.9 million people who weighed in said yes.

The move also raised questions about Tesla’s decision to buy $1.5 billion in bitcoin months earlier, when the massive energy use connected to the cryptocurrency has been known for years.

Some prominent figures in the tech world, including Bill Gates, have been critical of the impact that cryptocurrencies have on climate change. Early on Thursday morning, Musk chimed in again on Twitter with a graph showing rising energy consumption for bitcoin.

“Energy usage trend over past few months is insane,” Musk tweeted.

But others have promoted the hope that bitcoin may eventually be good for the environment.

Despite his recent enthusiasm for bitcoin, Musk said Tesla will not change its position until the currency uses fewer fossil fuels.

“We intend to use it for transactions as soon as mining transitions to more sustainable energy,” he said in a statement.

But he also floated the possibility that the company could turn to alternative cryptocurrencies that don’t contribute as many carbon emissions.

“We are also looking at other cryptocurrencies that use <1% of Bitcoin’s energy/transaction,” he said.

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2021-05-13 10:30:00Z