Bitcoin (CRYPTO-BTC), was trading as high as USD 57,000 yesterday before plummeting 14% to as low as almost USD 46,000. The drop came after Tesla Inc. (NASDAQ: TSLA) CEO Elon Musk announced that the Company has suspended its service to accept Bitcoin as payment. “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,” Musk stated in a tweet.
Bitcoin Mining is the process of putting new Bitcoins into circulation. It is a complex undertaking that involves using multiple computers to solve mathematical equations that reward a user with Bitcoin. The computing power needed to mine Bitcoin uses a significant amount of energy, thus making it extremely carbon intensive. This unfortunately does not fall in line with Tesla’s goal of improving the environment. On the other hand, investors holding Bitcoin have become increasingly frustrated with the dynamic of the crypto market.
Tesla made headlines when it purchased USD 1.5 Billion in Bitcoin to begin accepting it as payment, but the Company later sold 10% of its holdings in Bitcoin for a USD 110 Million profit. Investors on Reddit have accused Musk of engaging in a pump-and-dump scheme with Bitcoin for his own self interest. “Elon is lame and so is pump and dumping. This type of activity does not help cryptocurrency advance in any positive way. If anything it shows individuals who have public influence, that they have the social power to manipulate the prices of crypto in their favor. I for one am not a fan. It is the same as a pump and dump operation. It is illegal in the stock market, and only legal in crypto because it is grossly unregulated,” one user posted. However, Elon Musk has stated that Tesla could resume accepting Bitcoin once mining becomes more sustainable. The Company may also look into accepting cryptocurrencies that use less than 1% of Bitcoin’s computing power.