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.
Tesla & Bitcoin pic.twitter.com/YSswJmVZhP
— Elon Musk (@elonmusk) May 12, 2021
“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.
Pay by Bitcoin capability available outside US later this year
— Elon Musk (@elonmusk) March 24, 2021
Alas, Australians ready to buy a Tesla as soon as the cryptocurrency was accepted down under will now have to wait longer.