Elon Musk, CEO of Tesla, has announced that the electric car maker has suspended vehicle purchases using Bitcoin due to climate change concerns.
Following his announcement, Bitcoin, the world’s largest digital currency, saw its value drop by more than 10%, while Tesla shares also dipped.
It would be recalled that the electric carmaker in February revealed it had bought $1.5bn (£1bn) of the world’s biggest digital currency.
Then in March, Tesla announced that it would accept the cryptocurrency, a decision which was however met with an outcry from some environmentalists and investors.
Amid this, Elon Musk on Thursday backtracked on his previous comments via his Twitter page saying;
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… but this cannot come at great cost to the environment.
He also said the electric carmaker would not sell any of its Bitcoin, with the fair market value of its holdings as of March 31 was 2.48 billion dollars (£1.76 billion), according to securities filings.
It added that it intends to use it for transactions as soon as mining shifts to using more sustainable energy.
Tesla & Bitcoin pic.twitter.com/YSswJmVZhP
— Elon Musk (@elonmusk) May 12, 2021
Market analysts see the move as an attempt by Tesla to assuage the concerns of investors who are focused on climate change and sustainability.
Bitcoin relies on computers, which rely on electricity, to exist. The number of computers and the energy needed to power them is rising – the growing value of bitcoin is directly tied to the amount of energy it uses.
Miners unlock bitcoins by solving complex, unique puzzles and, as the value of bitcoin goes up, the puzzles become increasingly more difficult and it requires more computer power to solve them.
Estimates on how much energy Bitcoin uses vary. A 2019 study by researchers at Technical University of Munich and Massachusetts Institute of Technology concluded that, in late 2018, the entire bitcoin network was responsible for up to 22.9 million tons of Carbondioxide per year – similar to a large Western city or an entire developing country like Sri Lanka.
Total global emissions of the greenhouse gas from the burning of fossil fuels were about 37 billion tons last year.
Musk has been one of the world’s most high profile proponents of cryptocurrencies, often tweeting about Bitcoin and the once-obscure digital currency Dogecoin.
His tweets in recent months helped to turn Dogecoin, which was started as a social media joke, into the world’s fourth-biggest cryptocurrency.
