Elon Musk announced earlier this week that Tesla would no longer accept bitcoin for payment due to environmental concerns over the cryptocurrency.Credit:Getty
The turnaround by one of crypto’s loudest believers took investors by surprise andsent prices tumbling across the board. Bitcoin plunged 15 per cent at one point to below $US50,000 ($64,700). Exchange operator Coinbase sank as much as 5.3 per cent and other tokens including Ether and Dogecoin slumped.
“Bitcoin is also a manifestation of the value of the internet,and hence it stands to reason that social media and the cult of celebrity has,and will continue to have,an effect on driving demand,” said Stephen Kelso,head of markets at ITI Capital.
Mining the token consumes 66 times more electricity than it did back in late 2015,according to a recent Citigroup report.
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Musk signalled on Wednesday (US time) that Tesla might accept other cryptocurrencies if they are less energy intensive,and said the company won’t sell any of its bitcoin.
It’s unclear what prompted the decision and Musk and Zachary Kirkhorn,Tesla’s chief financial officer,didn’t immediately respond to an email inquiry for comment. Kirkhorn in March added the tongue-in-cheek title “Master of Coin,” according to a regulatory filing.
Still,Musk’s tweets raise questions about bitcoin’s attractiveness as an investment at a time when institutional firms are increasingly vocal about climate change and environmental issues.