Updated 18 May, 2021

Elon Musk Abandons Bitcoin as a Means of Payment for Vehicles

Elon Musk

 

Key Takeaways:

  • Elon Musk says Tesla will no longer accept Bitcoin as payment for electric cars
  • Bitcoin drops nearly 10% minutes after Mr. Musk’s tweet

 

Tesla Stops Accepting Bitcoin As Payment

Elon Musk, unexpectedly announced on Twitter that his car company, Tesla will no longer accept bitcoin as payment for the electric vehicles.

“Tesla has suspended vehicle purchases using Bitcoin,” the tweet said. “We are concerned about rapidly increasing use of fossil fuels for Bitcoin mining and transactions, especially coal. Coal has the worst emissions of any fuel,” Elon Musk continued in the tweet posted late on Wednesday.

Immediately after the announcement the price of bitcoin dropped about 10%. It dipped below the $50,000 and reached as low as $45,900 per coin. Bitcoin has been in a downturn trend since its price peaked to a record high in mid-April, climbing to $64,800.

Reactions From The Crypto Community

The announcement by Elon Musk and Tesla spurred on a backlash. They argued whether Mr. Musk’s intentions were purely speculatory given that the negative environmental impact is a popular line of criticism toward Bitcoin. Bear in mind that the environmental cost of mining the world’s biggest cryptocurrency has been explored and researched for years.

Critics said Tesla’s move undermines its environmental image. This comes after Tesla decided to plough $1.5bn of its cash reserves into Bitcoin in February. In the latest quarterly report, the EV maker revealed it had sold roughly 10% of its bitcoin stake to realize a profit of $101mn.

The Tesla chief recognized the value of cryptocurrency. This was shown in the tweet that 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.”

Elon Musk took an accommodative stance toward the crypto market in general. In the same tweet, he mentions that Tesla will not sell any Bitcoin. In the meantime, the car company is “looking at other cryptocurrencies that use <1% of Bitcoin’s energy/transaction.”