No Bitcoin For Tesla Vehicles, Cryptos Plummet After Disappointing News

Last Updated on June 1, 2021

MyFinancialTimes is a reader-centric site. We may receive compensation from the products and services we mention or recommend in this story, but the opinions are the author's own. Remuneration may impact where offers appear. We may not include all available products or offerings. To learn more you can visit our advertising policy and editorial policy.

Bitcoin dropped over 10 percent after Elon Musk suspended Tesla vehicle purchasing using the cryptocurrency. His tweet, which garnered almost a half-million likes, caused multiple cryptos to plummet lower than they’ve been in months.

 

The Tesla CEO made the tough decision to eliminate Bitcoin transactions for Tesla vehicles, citing an extreme environmental impact of the cryptocurrency. “Tesla has suspended vehicle purchases using Bitcoin,” Musk said in his tweet. “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 recently began accepting Bitcoin for vehicle transactions, sparking a dramatic rise in the crypto’s price. The price rose over $64,000 in mid-April for the first time but has since deflated. Now prices are crashing.

 

“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 wrote. Ever since his tweet Wednesday afternoon, Bitcoin has plummeted.

 

The price dropped nearly $10,000 in a single day, with its current price as of midday Thursday at around $47,621. CoinDesk reported that the 24-hour low was 46,294, with a high of $55,199. The change is drastic and has many wondering whether crypto has any sustainability with the latest controversy over Bitcoin.

 

Ethereum and Dogecoin also took major tumbles after Musk’s tweet, as well as dozens of others as investor confidence deflated. However, things are starting to repair themselves. On Thursday, Ethereum rose back 2 percent in the morning and Bitcoin rose 0.8 percent.

 

“Tesla will not be selling any Bitcoin and we intend to use it for transactions as soon as mining transitions to more sustainable energy,” Elon Musk assured the public. “We are also looking at other cryptocurrencies that use <1% of Bitcoin’s energy/transaction.”

 

Thursday morning, Musk shared a graph that depicts Bitcoin’s electricity consumption annually. The drastic increase over the last five years is certainly worrisome. As of Monday, May 10, estimated consumption rose to 148.77 TWh (1 terawatt hour or 1 trillion watt-hours) from around 30 TWh in 2018. The massive increase has prompted many politicians to blow the whistle on the cryptocurrency, including Elizabeth Warren.

 

“You don’t consume that kind of energy, in order to have money on deposit at a bank or a mutual fund,” Warren explained to Yahoo Finance. “In that sense, bitcoin is very different, and in a 21st century, we’re becoming a lot more sensitive to the worldwide impacts of the choices we make.”

 

There may still be hope for a Bitcoin-Tesla relationship. Elon Musk is open to a future with the coin if the systems begin to minimize its carbon footprint. This might also be an opening for other cryptocurrencies, like Dogecoin and Ethereum, to find their way to Bitcoin-level prices.

 

Elon Musk recently ignited a buying frenzy in Dogecoin when he announced his private rocket company, SpaceX, would be launching a satellite named Doge-1 next year. It plays on Musk’s joke, literally sending the cryptocurrency to the moon. The mission will also be paid for in Doge, a major step toward Dogecoin’s relevance and value in the market.

 

For many, Bitcoin’s crash is a good enough reason to stay clear, while others haven’t lost faith just yet. This coin, though drastically lower than yesterday, was finding its footing again as of Thursday afternoon.