Prices of bitcoin and other cryptos plunged after Tesla CEO reversed decision to accept digital currency as payment.
Elon Musk’s announcement Wednesday that Tesla would no longer accept bitcoin as a payment for purchase of its vehicles caused investors to hit the breaks on the booming cryptocurrency market. Musk said his decision had to do with bitcoin’s growing, but some questioned whether that was really the case, considering that Tesla’s core products are environmentally friendly electric cars and solar energy panels and it is no secret that mining bitcoin through massive amounts of computer power is an energy-intensive enterprise. The result was a swift plunge Wednesday night in cryptocurrency prices that equalled hundreds of billions of dollars in losses for investors and other holders of digital currencies. Despite Musk’s, Tesla said it planned to hold onto its investment in bitcoin, which was valued at about $1.5 billion at the end of March. Tesla’s profits hit $438 million in the first three months of the year — the most the company has ever earned in a single quarter. But nearly a quarter of those profits, or $101 million, came from selling a portion of the company’s. « We are concerned about rapid increasing use of fossil fuels for bitcoin mining and transactions, especially coal, which has the worst emissions of any fuel, » Musk said on Twitter. He added that cryptocurrency is a « good idea on many levels » but its promise cannot come at a « great cost to the environment. » The price of bitcoin tumbled nearly $9,000 to just over $46,000 on Wednesday night, shortly after Musk’s announcement. Other digital currencies dropped as well. The price of ethereum fell about 12%, or $500, to around $3,700, as of late Thursday. In all, Musk’s single tweet erased as much as $365 billion in value from the cryptocurrency market, according to CNBC’s calculations.
