Tesla will stop accepting bitcoin for car purchases, citing environmental concerns, says Elon Musk

 

Tesla CEO Elon Musk said Wednesday on Twitter that Tesla has “suspended vehicle purchases using bitcoin,” out of concern over “rapidly increasing use of fossil fuels for bitcoin mining.”

The price of bitcoin dropped about 5% in the first minutes after Musk’s announcement.

In an SEC filing in February, Tesla revealed that it bought $1.5 billion worth of bitcoin and it may invest in more of bitcoin or other crypto currencies in the future.

At that time, the company said it would start accepting bitcoin as a payment method for its products.

Support for cryptocurrency from Tesla contributed to the prices of cryptocurrencies, including bitcoin and dogecoin, skyrocketing in recent months.

Here was Musk’s full announcement:

“Tesla has suspended vehicle purchases using Bitcoin. 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.

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.

Tesla will not be selling any Bitcoin and we intend to use it for transactions as soon as mining transitions to more sustainable energy.

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

Mainstream investors and some corporate buyers including Tesla, Square, Metromile and Nexon have flocked to bitcoin; viewing the digital currency as a potential inflation hedge while central banks print money to relieve coronavirus-distressed economies.

Major Wall Street banks like Goldman Sachs and Morgan Stanley have also sought to provide their wealthy clients with bitcoin exposure.

But some investors, like Softbank founder Masayoshi Son, still aren’t buying in to the crypto craze.

“There’s a lot of discussion over if it’s a good thing or a bad thing, what’s the true value or is it in a bubble.

Honestly speaking, I don’t know,” Son said at a recent earnings conference.

While Tesla said it would not accept bitcoin for vehicle purchases on Wednesday; Musk specified that Tesla plans to hold rather than sell the bitcoin it already has, and would be looking into other cryptocurrencies that require less energy for transactions.

During the first quarter of 2021, Tesla bought $1.5 billion worth of “digital assets,” then sold $272 million worth.

According to a financial filing from Tesla on April 26; profits from bitcoin sales specifically allowed the company to notch a $101 million “positive impact” toward profitability.

Musk has been a very public fan of bitcoin and dogecoin, tweeting and joking about these with his millions of Twitter followers over the past year.

This past weekend, the Tesla chief made his hosting debut on “Saturday Night Live” and devoted part of his opening monologue and one sketch to talking up dogecoin.

Instead of helping drive up the price of the meme-inspired token; dogecoin actually tanked 30% over the course of the hour that Musk was hosting SNL.

During a frenzied sell-off at that time, the popular trading platform Robinhood experienced an outage in its crypto trading.

Following Musk’s announcement on Thursday, Dallas Mavericks owner Mark Cuban said that the team will continue to accept bitcoin and other crpytocurrencies because “we know that replacing Gold as a store of value will help the environment.”