Elon Musk has announced that Tesla will no longer allow bitcoin for car purchases due to environmental concerns.
Elon Musk, the CEO of Tesla, announced on Twitter on Wednesday that the company has "suspended vehicle transactions using bitcoin" due to concerns about the "rapidly growing use of fossil fuels for bitcoin mining."
In the minutes following Musk's announcement, the price of bitcoin fell by around 5%.
Tesla disclosed in a February SEC filing that it had purchased $1.5 billion in bitcoin and that it would invest in more bitcoin or other crypto currencies in the future.
The company announced at the time that it would begin accepting bitcoin as a payment method for its goods.
Tesla's support for cryptocurrency has helped to drive up the prices of cryptocurrencies like bitcoin and dogecoin in recent months.
Here's the full text of Musk's announcement:
“Bitcoin-based vehicle transactions have been halted by Tesla. We're concerned about the rapidly growing use of fossil fuels for Bitcoin mining and transactions, especially coal, which emits the most pollutants of any fuel. On several ways, cryptocurrency is a positive concept, and we believe it has a bright future, but it cannot come at the expense of the climate. Tesla will not sell Bitcoin, and we intend to use it for transactions as soon as mining shifts to more environmentally friendly energy sources. Other cryptocurrencies that use less than 1% of Bitcoin's energy/transaction are also being investigated.”
Bitcoin has attracted mainstream investors and some corporate buyers, including Tesla, Square, Metromile, and Nexon, who see the digital currency as a possible inflation hedge while central banks print money to support coronavirus-affected economies.
Major Wall Street banks such as Goldman Sachs and Morgan Stanley have also attempted to provide bitcoin exposure to their high-net-worth clients.
However, some investors, such as Softbank founder Masayoshi Son, are still sceptical of the cryptocurrency craze.
A lot of people are debating if it's a good thing or a bad thing, what it actually means, and whether it lives in a bubble. "To be honest, I don't know," Son confessed during a recent earnings call.
Although Tesla announced on Wednesday that it will not allow bitcoin for vehicle purchases, Musk clarified that the company intends to keep rather than sell the bitcoin it already has and is looking into other cryptocurrencies with lower transaction energy requirements.
Tesla purchased $1.5 billion in "digital properties" in the first quarter of 2021, and sold $272 million of them. Tesla said in a financial filing on April 26 that gains from bitcoin sales helped the company achieve a $101 million "positive effect" on profitability.
Musk has been a vocal supporter of bitcoin and dogecoin in recent months, tweeting and joking about them to his millions of Twitter followers.
The Tesla CEO made his hosting debut on "Saturday Night Live" this past weekend, dedicating part of his opening monologue and one sketch to promoting dogecoin. Instead of helping to push up the price of the meme-inspired token, dogecoin plummeted 30% during Musk's hour on Saturday Night Live.
The famous trading platform Robinhood suffered an outage in its crypto trading during a frantic sell-off at the time.
Following Musk's announcement on Thursday, Mark Cuban, the owner of the Dallas Mavericks, said that his team would continue to accept bitcoin and other cryptocurrencies because "we know that replacing gold as a store of value will benefit the world."
Meanwhile, Musk polled his Twitter followers on whether Tesla should welcome dogecoin on Monday. Yes, said 78.3 percent of those polled.