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Tesla stops accepting bitcoin for electric cars in a U-turn that sends cryptocurrency prices plunging
- Tesla announced that it would no longer accept bitcoin for its electric cars, citing the environment cost of mining and trading cryptocurrencies
- “We intend to use [bitcoin] for transactions as soon as mining transitions to more sustainable energy,” Tesla’s CEO Musk said in his tweet
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Tesla has ended its flirtation with cryptocurrencies, reversing its March 24 announcement to accept payments made in bitcoin for its electric vehicles, in an abrupt U-turn that sent the prices of the largest token tumbling on global exchanges.
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In an announcement made via Twitter, Tesla’s chief executive Elon Musk cited the “increasing use of fossil fuels … especially coal,” involved in bitcoin mining and transactions as the reason for his decision.
“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,” according to the tweet by Musk, whose company made a US$101 million in one-time net gain in the first quarter from his US$1.5 billion bet on bitcoin.
The price of bitcoin tumbled by more than 8 per cent to US$50,121 each after Musk’s tweet, reflecting the correlation between arguably two of the biggest buzzwords in global finance: Elon Musk and bitcoin. The largest cryptocurrency by capitalisation has surged 50 per cent in value since Tesla’s February 8 announcement of its bet on the token.
Tesla sold US$272 million of bitcoin during the quarter, making a US$128 million profit from the trade, according to its 10-Q regulatory filings in New York and its first-quarter cash flow statement. While it suffered a US$27 million impairment in digital assets, Tesla was sitting on unrealised gain as the US$2.48 billion fair market value exceeded its cost of US$1.331 billion on March 31.
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