Crypto Market Tumbles As Elon Musk’s Tesla Suspends Bitcoin Payment Option

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(Bloomberg) —

image image

Tesla Inc.’s Chief Executive Officer Elon Musk said the
electric-vehicle manufacturer is suspending purchases using
Bitcoin, triggering a slide in the digital currency.

image

In a post on Twitter Wednesday, Musk cited concerns about
“rapidly increasing use of fossil fuels for Bitcoin mining and
transactions,” while signaling that Tesla might accept other
cryptocurrencies if they are much less energy intensive. He also
said the company won’t be selling any of the Bitcoin it holds.

The largest cryptocurrency dropped as much as 15% to just above
$46,000, before paring some of the retreat. It was down about 6% to
$51,210 as of 7:03 a.m. in London on Thursday. Other tokens such
Ether and Dogecoin also slid. The rush to sell briefly caused
outages at some cryptocurrency exchanges. Bitcoin is still up more
than fivefold in the past year.

Musk’s move comes after Tesla disclosed in February that it had
purchased $1.5 billion in Bitcoin and planned to accept it as a
payment. That announcement added legitimacy to the cryptocurrency
as an increasingly acceptable form of payment and an investment,
especially coming from a large member of the S&P 500 with a
high-profile CEO who commands a big following among retail
investors and the general public.

Tesla’s website, which had a support page dedicated to Bitcoin,
noted that the token was the only cryptocurrency that Tesla accepts
in the continental U.S. Musk has also tweeted frequently about
Dogecoin, a cryptocurrency started as a joke in 2013 — and he
quipped about being the “Dogefather” before and during his stint
hosting the “Saturday Night Live” show on May 8. He tweeted on
Tuesday, “Do you want Tesla to accept Doge?”

Tesla’s addition of Bitcoin to its balance sheet was the most
visible catalyst during this year’s rally in the digital currency.
Bitcoin jumped 16% that day, the biggest one-day gain since the
Covid-19 induced financial markets volatility in March 2020.

Optimism grew after Mastercard Inc., Bank of New York Mellon
Corp. and other firms moved to make it easier for customers to use
or invest in cryptocurrencies, fueling the mainstream resurgence
that took Bitcoin from about $29,000 at the end of last year to as
high as almost $65,000 in April.

Bitcoin mining is consuming 66 times more electricity than it
did back in late 2015, and the carbon emissions associated with it
will likely face increasing scrutiny, according to a recent
Citigroup Inc. report.

Musk is no stranger to considering the issue of crypto’s
environmental impact.

Musk Splits From Cathie Wood’s Ark on Bitcoin Environmental
Cost

Cathie Wood’s Ark Investment Management LLC published a report
last month saying cryptocurrency mining can drive investment in
solar power and make more renewable energy available to the grid.
Twitter Inc.’s Jack Dorsey retweeted a post on the white paper with
the comment that Bitcoin “incentivizes renewable energy.” Musk
replied to Dorsey’s tweet, saying simply, “True.”

‘Confusing’

Musk’s tweet on Wednesday took many in the cryptocurrency
community by surprise, including Nic Carter, founding partner at
Castle Island Ventures, and a leading voice among defenders of
Bitcoin’s energy use.

“Surely he would have done his diligence prior to accepting
Bitcoin?” Carter said. “Very odd and confusing to see this quick
reversal.”

It’s unclear what prompted the decision and Musk and Zachary
Kirkhorn, Tesla’s chief financial officer, didn’t immediately
respond to an email inquiry for comment. Kirkhorn in March added
the tongue-in-cheek title “Master of Coin,” according to a
regulatory filing.

Tesla’s first-quarter earnings were bolstered by the sale of 10%
of its Bitcoin holdings. Musk said last month the disposal was
intended to demonstrate the token’s liquidity, and added that he’s
retained his personal investment in the cryptocurrency.

Kirkhorn said on the firm’s earnings call in late April that
Tesla believed in Bitcoin’s long-term value and planned to
accumulate the tokens from transactions with customers.

(Bloomberg) —

image image

Tesla Inc.’s Chief Executive Officer Elon Musk said the
electric-vehicle manufacturer is suspending purchases using
Bitcoin, triggering a slide in the digital currency.

image

In a post on Twitter Wednesday, Musk cited concerns about
“rapidly increasing use of fossil fuels for Bitcoin mining and
transactions,” while signaling that Tesla might accept other
cryptocurrencies if they are much less energy intensive. He also
said the company won’t be selling any of the Bitcoin it holds.

The largest cryptocurrency dropped as much as 15% to just above
$46,000, before paring some of the retreat. It was down about 6% to
$51,210 as of 7:03 a.m. in London on Thursday. Other tokens such
Ether and Dogecoin also slid. The rush to sell briefly caused
outages at some cryptocurrency exchanges. Bitcoin is still up more
than fivefold in the past year.

Musk’s move comes after Tesla disclosed in February that it had
purchased $1.5 billion in Bitcoin and planned to accept it as a
payment. That announcement added legitimacy to the cryptocurrency
as an increasingly acceptable form of payment and an investment,
especially coming from a large member of the S&P 500 with a
high-profile CEO who commands a big following among retail
investors and the general public.

Tesla’s website, which had a support page dedicated to Bitcoin,
noted that the token was the only cryptocurrency that Tesla accepts
in the continental U.S. Musk has also tweeted frequently about
Dogecoin, a cryptocurrency started as a joke in 2013 — and he
quipped about being the “Dogefather” before and during his stint
hosting the “Saturday Night Live” show on May 8. He tweeted on
Tuesday, “Do you want Tesla to accept Doge?”

Tesla’s addition of Bitcoin to its balance sheet was the most
visible catalyst during this year’s rally in the digital currency.
Bitcoin jumped 16% that day, the biggest one-day gain since the
Covid-19 induced financial markets volatility in March 2020.

Optimism grew after Mastercard Inc., Bank of New York Mellon
Corp. and other firms moved to make it easier for customers to use
or invest in cryptocurrencies, fueling the mainstream resurgence
that took Bitcoin from about $29,000 at the end of last year to as
high as almost $65,000 in April.

Bitcoin mining is consuming 66 times more electricity than it
did back in late 2015, and the carbon emissions associated with it
will likely face increasing scrutiny, according to a recent
Citigroup Inc. report.

Musk is no stranger to considering the issue of crypto’s
environmental impact.

Musk Splits From Cathie Wood’s Ark on Bitcoin Environmental
Cost

Cathie Wood’s Ark Investment Management LLC published a report
last month saying cryptocurrency mining can drive investment in
solar power and make more renewable energy available to the grid.
Twitter Inc.’s Jack Dorsey retweeted a post on the white paper with
the comment that Bitcoin “incentivizes renewable energy.” Musk
replied to Dorsey’s tweet, saying simply, “True.”

‘Confusing’

Musk’s tweet on Wednesday took many in the cryptocurrency
community by surprise, including Nic Carter, founding partner at
Castle Island Ventures, and a leading voice among defenders of
Bitcoin’s energy use.

“Surely he would have done his diligence prior to accepting
Bitcoin?” Carter said. “Very odd and confusing to see this quick
reversal.”

It’s unclear what prompted the decision and Musk and Zachary
Kirkhorn, Tesla’s chief financial officer, didn’t immediately
respond to an email inquiry for comment. Kirkhorn in March added
the tongue-in-cheek title “Master of Coin,” according to a
regulatory filing.

Tesla’s first-quarter earnings were bolstered by the sale of 10%
of its Bitcoin holdings. Musk said last month the disposal was
intended to demonstrate the token’s liquidity, and added that he’s
retained his personal investment in the cryptocurrency.

Kirkhorn said on the firm’s earnings call in late April that
Tesla believed in Bitcoin’s long-term value and planned to
accumulate the tokens from transactions with customers.

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