Bitcoin crashes after Elon Musk suspends Tesla acceptance

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 and went below 12%, while Tesla shares also dipped.

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 & Bitcoin pic.twitter.com/YSswJmVZhP

— Elon Musk (@elonmusk) May 12, 2021

“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.