Tesla Chief Executive Officer Elon Musk announced on Twitter that the company would stop accepting bitcoin (BTC) payments due to concerns over “rapidly increasing use of fossil fuels for Bitcoin mining.”
In his social media post, Musk said on many levels, cryptocurrency is a good idea, and it has a promising future. However, he noted that this should not come at a great cost for the environment.
Earlier this year, Tesla began accepting the crypto as payment for its cars, and the move was regarded as a huge win for the crypto market, legitimizing the transactional utility of bitcoin and becoming more than just a speculative asset.
Environmental issues related to Bitcoin are nothing new, with many criticizing and expressing concerns over its Proof-of-Work (POW) system because of its massive electrical consumption.
Furthermore, Bitcoin has seen price surges last month following the anticipated public listing of Coinbase on the Nasdaq, reaching as high as above $64,000. This has given miners additional incentive to expand their operations, resulting in electric consumption levels that exceed that of small nations.
In fact, the Bitcoin Electricity Consumption Index of the University of Cambridge shows Bitcoin miners all over the world account for 147 terawatts of electricity, representing roughly 0.5% of global power usage.
Bitcoin falls again
Following the billionaire’s announcement on Twitter, bitcoin prices saw a 10% drop, falling down to around $51,000.
Options data from Deribet Metrics also indicate that the future of the cryptocurrency might have been affected as well, with its put/call ratio now pegged at 0.88.
While the latest development involving Tesla did not do Bitcoin any good, investors, however, should take note that the company hasn’t sold most of its bitcoin holdings. Musk said Tesla would continue holding the crypto on its balance sheet, and they will actively search for more environment-friendly alternatives.
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