Elon Musk has taken to Twitter to announce that his company will stop accepting bitcoin payments for vehicles.
“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.”
The decision comes after Tesla bought $1.5bn (€1.23bn) worth of bitcoin in February and announced plans to accept it as payment.
The move hasn’t been without its detractors, not least those invested in the cryptocurrency who had to stomach an initial 12% drop in its value after Musk hit ‘Tweet’.
Others took to social media to point out the inconsistency of Musk’s stance on bitcoin when his cars, solar panels and rockets depend on physical mining for raw materials.
Too high a price
Musk added: “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.”
Tesla will not be selling any of the tokens it bought in February.
He said that the company intends to use bitcoin “for transactions as soon as mining transitions to more sustainable energy. We are also looking at other cryptocurrencies that use <1% of bitcoin’s energy [per transaction]”.
AJ Bell financial analyst Laith Khalaf points to the environmental mismatch between the car company and bitcoin when it comes to the “colossal amount of energy consumed by the cryptocurrency”.
“Musk hasn’t closed the door on Bitcoin entirely, and Tesla says it will return to using the cryptocurrency once it transitions to using more sustainable energy. Even if that happens, one could question whether that energy couldn’t be used more productively in the global economy, rather than solving a payments problem that, for most people, simply doesn’t exist.”
So, where does this leave bitcoin?
Khalif adds: “Environmental matters are an incredibly sensitive subject right now, and Tesla’s move might serve as a wake-up call to businesses and consumers using bitcoin, who hadn’t hitherto considered its carbon footprint.
“Tesla’s decision certainly puts pressure on other big companies who accept bitcoin to review their practices, because boardrooms will now be wary about getting it in the ear from ESG investors on the shareholder register.
“This highlights that the long-term adoption of cryptocurrencies by businesses, consumers and investors is still highly uncertain, as Tesla itself has pointed out.”