In a tweet on Wednesday Tesla’s CEO, Elon Musk announced that the company will no longer accept Bitcoin as payment for its electric cars. The reason is the high energy costs needed for Bitcoin mining.
The news came as a shock for the price of the biggest cryptocurrency by market cap. It went from $54K to $49K according to CoinMarketCap.
Musk wrote, “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.”
Tesla started to accept Bitcoin for its products after adding $1.5B worth of BTC to its balance sheet. The news that Tesla bought crypto moved the price from $39 000 to $53 000.
This leads to unhappy climate-conscious consumers and shareholders. They believe that the investment is against the eco-friendly policy of the company and is not part of the main business. As a result, many analysts like Dan Ives said that Tesla’s stock had become “heavily tied” to the price of Bitcoin.
Bitcoin uses proof of work (PoW). To verify a block of transactions the computers are competing with each other to solve complex cryptographic puzzles. The first to do so wins a small amount of Bitcoin as a reward. The bad news is that the miners use electricity to main. A recent study from Cambridge University estimated that the power used by Bitcoin is higher than Argentina’s.
Another study from the same university found that 39% of the network uses renewable power.
Even though Elon Musk has seen enough. “Tesla will not be selling any Bitcoin and we intend to use it for transactions as soon as mining transitions to more sustainable energy,” he wrote.
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