The price of Bitcoin dropped to 15% as of 6:50 a.m. ET on Thursday. as $365 billion was wiped off the cryptocurrency market. This came when Tesla announced the company would no longer accept the cryptocurrency as payment for electric vehicles.
Tesla CEO Elon Musk tweeted last night that the electronic vehicle company would suspend vehicle purchases using bitcoin, citing bitcoin’s high environmental cost as the reason for the move.
Tesla & Bitcoin pic.twitter.com/YSswJmVZhP
— Elon Musk (@elonmusk) May 12, 2021
Bitcoin mining, the process by which new bitcoins are entered into circulation, requires a large amount of electricity, which has climate activists concerned about its environmental impact.
“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,” Musk said via Twitter Wednesday. “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.” he tweeted.
Last March, Musk announced plans that American customers could officially pay for their cars with bitcoin cryptocurrency for payments.
Tesla’s decision to stop accepting one of the most popular cryptocurrencies as payment for its cars caused a drastic effect for other cryptocurrencies as well. Ethereum and Dogecoin all dropped significantly lower.
Bitcoin plunged 17%, dropping from around $54,819 to $45,700, its lowest since March 1. According to CNBC, Dogecoin, a relatively new but popular cryptocurrency, fell below $0.40 per coin. Ethereum also dropped more than 12%.
Musk said that Tesla still plans to use bitcoin after the currency finds cleaner energy sources despite recent updates.
“Tesla will not be selling any Bitcoin and we intend to use it for transactions as soon as mining transitions to more sustainable energy,” he said. “We are also looking at other cryptocurrencies that use <1% of Bitcoin’s energy/transaction.” said Musk via Twitter.
Many in the Bitcoin community are shocked to find out how much power the billionaire, Musk, has to influence the market within a matter of just one night. Frustration started to mount over the night as #DontBuyTesla began to trend. A noticeable backlash against the recent policy change began to form.
Elon’s vague explanation for the company’s decision has left many to wonder whether Musk and other Tesla executives considered or discussed the energy consumption of bitcoin mining before the investment they disclosed in March and will have a significant effect on the capabilities of Bitcoin as currency.