Elon Musk sends bitcoin tumbling with stunning reversal over payments

Tesla has suspended the use of bitcoin to purchase its vehicles because of climate concerns, Chief Executive Officer Elon Musk said in a tweet on Wednesday, reversing the company’s stance in the face of an outcry from some environmentalists and investors.

Bitcoin, the world’s biggest digital currency, fell more than 7 per cent after the tweet and was trading at $52,669.

Tesla revealed in February it had bought $1.5 billion of bitcoin and would soon accept it as payment for cars, driving a roughly 20 per cent surge in the world’s most widely held cryptocurrency.

Musk on Wednesday said Tesla would not sell any bitcoin, and 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 per cent of bitcoin's energy/transaction,” Musk said.

Musk said in March Tesla that customers can buy its electric vehicles with bitcoin. The digital currency is created when high-powered computers compete against other machines to solve complex mathematical puzzles, an energy-intensive process that currently often relies on electricity generated with fossil fuels, particularly coal. At current rates, such bitcoin mining devours about the same amount of energy annually as the Netherlands did in 2019, the latest available data from the University of Cambridge and the International Energy Agency shows. Some investors cast doubt on Tesla's plans months ago.

“We are of course very concerned about the level of CO2 emissions generated from bitcoin mining,” said Ben Dear, CEO of Osmosis Investment Management, a sustainable investor managing around $2.2 billion in assets that holds Tesla stock in several portfolios, in February, shortly after Tesla's holdings became public.