Tesla Chief Executive Elon Musk said the electric-vehicle manufacturer will no longer allow customers to pay with bitcoin, triggering a slide in the value of the digital currency.
In a Twitter post Wednesday, Musk cited concerns about “rapidly increasing use of fossil fuels for Bitcoin mining and transactions.” The move comes after Tesla disclosed in February that it had purchased $1.5 billion in bitcoin and planned to accept it as a payment.
As a newly added member of the blue chip Standard & Poor’s 500 stock index, Tesla’s surprise announcement added legitimacy to the cryptocurrency as an increasingly acceptable form of payment and as an investment.
Tesla’s addition of bitcoin to its balance sheet was the most visible catalyst during this year’s rally in the digital currency. Bitcoin jumped 16% that day, the biggest one-day gain since the COVID-19 inspired financial markets volatility in March 2020.
Optimism grew after Mastercard, Bank of New York Mellon and other companies moved to make it easier for customers to use cryptocurrencies, fueling the mainstream resurgence that took bitcoin from about $29,000 at the end of last year to as high as almost $65,000 on April 14. Bitcoin slumped as much as 4.4% to around $52,000 after Musk’s latest tweet.
Bitcoin mining is consuming 66 times more electricity than it did back in late 2015, and the carbon emissions associated with it will probably face increasing scrutiny, according to a recent Citigroup Inc. report.
But Musk’s tweet took many in the cryptocurrency community by surprise, including Nic Carter, a partner at Castle Island Ventures and a leading voice among defenders of bitcoin’s energy use.
“Surely he would have done his diligence prior to accepting Bitcoin?’ Carter said. “Very odd and confusing to see this quick reversal.”
It’s unclear what prompted the decision, and Musk and Zachary Kirkhorn, Tesla’s chief financial officer, did not respond to an email inquiry for comment.
Bloomberg writer Olga Kharif contributed to this report.
This story originally appeared in Los Angeles Times.