Tesla stops taking Bitcoin payments over fossil fuel concerns

Bitcoin’s (CRYPTO: BTC) price is falling as Telsa Inc’s (NASDAQ: TSLA) CEO Elon Musk shared news Tesla won’t accept Bitcoin as payment.

| More on:
bitcoin symbol in drop of fuel from fuel pump

Image Source: Getty Images

The price of Bitcoin (CRYPTO: BTC) is falling today as Tesla Inc‘s (NASDAQ: TSLA) CEO Elon Musk announced the company would no longer be offering Bitcoin as a payment option. Musk tweeted this morning that Tesla has suspended Bitcoin payments for Tesla electric vehicles due to fossil fuels used in Bitcoin mining.

“Cryptocurrency is a good idea on many levels and we believe it has a promising future, but this cannot come at a great cost to the environment,” tweeted Musk.

At this point, Tesla won’t be selling its Bitcoin reserves. Musk hopes Tesla will begin using the cryptocurrency again if Bitcoin mining turns to renewable energy sources.

Musk also said the company is looking to use other cryptocurrencies, some of which use less than 1% of Bitcoin mining’s energy needs.

Let’s take a look at what Tesla’s strong environmental stance has done to the value of Bitcoin.

Bitcoin mining too much for Tesla

After Musk’s tweet, the price of Bitcoin fell by as much as 12.6% at its lowest point.

At the time of writing, a single Bitcoin is trading for AU$65,468.43. 7 minutes before Musk’s tweet this morning, a Bitcoin was worth AU$70,626.99.

It hit its lowest point of the day around 2 hours after Musk’s tweet when a Bitcoin was costing investors AU$61,725.35.

Bitcoin mining is built into the design of the cryptocurrency. To put it simply, Bitcoin miners receive Bitcoins in exchange for verifying transactions. The verification process is extremely complicated. Therefore, Bitcoin miners employ supercomputers and algorithms to do much of the hard work.

All of this takes an enormous amount of power. In fact, according to ABC News, Bitcoin mining might soon use more electricity than all of Australia.

Cambridge University’s Cambridge Centre for Alternative Finance has found 38% of Bitcoin mining is powered by energy from burning coal.

This is partly due to two-thirds of Bitcoin mining taking place in China. Aside from China’s rainy season, which makes hydroelectricity cheap, the country’s miners use coal power.

Tesla wakes from its Bitcoin dream

In February, the electric vehicle manufacturer invested US$1.5 billion in the cryptocurrency. Tesla’s purchase caused Bitcoin’s value to surge to what was, at the time, an all-time high.

At the time, The Motley Fool Australia reported Tesla’s investment could legitimise the digital currency market and pave the way for more companies to adopt the crypto asset as a part of their treasury-management strategies.

Musk announced on Twitter Inc (NYSE: TWTR) in March that US Tesla dealerships would be accepting Bitcoin payments.

Alas, Australians ready to buy a Tesla as soon as the cryptocurrency was accepted down under will now have to wait longer.

Wondering where you should invest $1,000 right now?

When investing expert Scott Phillips has a stock tip, it can pay to listen. After all, the flagship Motley Fool Share Advisor newsletter he has run for over ten years has provided thousands of paying members with stock picks that have doubled, tripled or even more.*

Scott just revealed what he believes could be the five best ASX stocks for investors to buy right now. These stocks are trading at near dirt-cheap prices and Scott thinks they could be great buys right now.

*Returns as of January 12th 2022

Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned.

The Motley Fool Australia's parent company Motley Fool Holdings Inc. owns shares of and recommends Bitcoin, Tesla, and Twitter. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

More on Cryptocurrencies

Concept image of Bitcoin and hand using laptop.
Cryptocurrencies

Using Bitcoin to diversify your portfolio? Read this

Cryptos have been rising and falling largely in line with other risk assets.

Read more »

Smiling ASX investor holding a gold bitcoin.
Cryptocurrencies

Good riddance to meme speculators ditching Bitcoin: expert

The exit of 'get rich quick' investors from crypto is a boon for serious long-term holders, says DeVere Group boss…

Read more »

a man weraing a suit sits nervously at his laptop computer biting into his clenched hand with nerves, and perhaps fear.
Cryptocurrencies

Can regulators prevent another US$45 billion crypto stablecoin meltdown?

Terra's LUNA token, meant to help its UST token remain pegged to the US dollar, has lost 99.99% of its…

Read more »

A man looks down with fright as he falls towards the ground.
Cryptocurrencies

Is the Bitcoin price heading all the way back down to US$20,000?

Last week's meltdown of UST and its backing crypto LUNA sent most every crypto tumbling lower.

Read more »

A rich buisnessman buys luxury items with Bitcoin
Cryptocurrencies

How is the Bitcoin ETF (EBTC) performing compared to the ASX on Friday?

All three crypto ETFs which launched yesterday are well into the green today.

Read more »

Man looking concerned head in hands at laptop
Cryptocurrencies

Could the next crypto collapse flow through to ASX shares?

The LUNA token, meant to keep UST pegged to the US dollar, just crashed more than 99%.

Read more »

a man peers out from a high collared jacket with just his eyes and nose visible amid a swirling snowstorm.
Cryptocurrencies

Is this the start of a long crypto winter?

Looking back, a cryptocurrency bear market started exactly a year ago. How long will this last until fortunes turn around…

Read more »

a close up of a woman's face looks skywards as she is showered in a sea of graphic symbols of gold and silver coins bearing the bitcoin logo.
Cryptocurrencies

How are Australia’s Ethereum and Bitcoin ETFs faring on their first day?

The three crypto ETFs all offer investors direct exposure to the underlying digital tokens, but you won't find them on…

Read more »