Tesla CEO Elon Musk has announced that the company will no longer accept Bitcoin as a means of payment for its electric cars. In a tweet, Musk posted a graph of Bitcoin’s rising power consumption over the past few months. Musk now wants Tesla to distance itself from Bitcoin on the grounds that Bitcoin mining consumes too much energy.
The announcement came as a shock to many, as Musk has been a strong supporter of Bitcoin. In February, Tesla revealed that it had purchased $1.5 billion worth of Bitcoin shares, skyrocketing Bitcoin prices. In April, the company announced having cut its shares by 10%, making a $100 million profit in the process.
After the announcement on Wednesday, Bitcoin shares sank by 17%, the lowest drop since March 1. However, the shares climbed back to $50,360 on Thursday. Tesla shares also dropped by 3.08% after the announcement, the lowest since March 8.
The decision by Musk has been criticized by many who think he is being hypocritical. Just a few months ago, he was praising the cryptocurrency. Even after announcing that Tesla will no longer accept Bitcoin, Musk still owns huge shares in Bitcoin.
The move is believed to be inspired by critics, who have been raising concerns about the way Bitcoin is mined. Bitcoin mining happens through high-powered computers competing to solve complex mathematical puzzles in a process that consumes extensive amounts of energy. Deutsche Bank analysts say that if Bitcoin were a country, it would use as much electricity as Switzerland.
“Tesla and Bitcoin were always odd bedfellows, given the environmental credentials of the electric car maker, and the colossal amount of energy consumed by the cryptocurrency,” said Laith Khalaf, financial analyst at fund platform AJ Bell.
Musk has pledged to pressure other companies to rethink the consequences of accepting Bitcoin moving forward.
“We were surprised it took Musk so long to recognize the detrimental impact of Bitcoin on the environment but are happy to see the reversal of Tesla’s position,” said Ben Dear, CEO of Osmosis Investment Management, which holds Tesla stock.
Even with the announcement, Musk says that he will continue pursuing cryptocurrencies that use less than 1% of what Bitcoin uses in terms of energy.
Image via Dmitry Demidko