Elon Musk Says Tesla Is Suspending Bitcoin Payments Over Environmental Concerns

Thursday 13 May 2021, 8:38 AM AEST - 1 month ago

Tesla first announced it was accepting BTC for car payments starting in February. The announcement came in concert with a $1.5 billion investment in bitcoin as a treasury asset.

Cryptocurrency cannot come at great cost to the environment, the electric carmaker said in a statement tweeted by Musk. The statement was hedged, but only slightly, with praise for cryptos promising future and a promise to investigate less energy-hungry networks than Bitcoins.

Bitcoin, a proof-of-work (PoW) blockchain reliant on energy-intensive mining units, has come under fire from environmental groups as its price has surged to all-time highs. Ethereum, the second-largest cryptocurrency by market cap, also relies on PoW but is in the process of switching to proof-of-stake.

Teslas pledge turns up the heat on the race to move bitcoin away from fossil fuels. The companys decision to accept bitcoin in early 2021 was a watershed moment for corporate bitcoin adoption. Teslas turnabout on environmental matters will likely give fuel to the social and even political moment clamoring for change to the worlds largest cryptocurrency.

The sudden freeze of Teslas bitcoin payments hands a decisive win to bitcoins energy critics. But it does not spell doom for Teslas remaining bitcoin investment nor its crypto experiment. Tesla will not be selling any bitcoin, the statement read. We intend to use it for transactions as soon as mining transitions to more sustainable energy.

No such plans are publicly known. The most reputable report on the matter says nearly 40% of Bitcoins energy consumption was carbon-neutral.

Tesla did test the liquidity of the bitcoin market with a $272 million sell announced in its most recent earnings call.

Bitcoins price is now down nearly 6% over the past 24 hours, thought it fell about $2,000 after Musks tweet.

This is a developing story and will be updated.

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