The ‘Musk effect’ works both ways. Tesla CEO and SpaceX boss, Elon Musk, who is known for batting for cryptocurrency online and managing to create a rise in the prices of the tokens seems to have done the opposite for a change. Musk on Thursday announced that Tesla is suspending purchases with Bitcoin which triggered a slide in the digital currency. In a post on Twitter Wednesday, Musk cited concerns about the “rapidly increasing use of fossil fuels for Bitcoin mining and transactions," while signalling that Tesla might accept other cryptocurrencies if they are much less energy-intensive. He also said the company won’t be selling any of the Bitcoin it holds.
Musk’s move comes after Tesla disclosed in February that it had purchased $1.5 billion in Bitcoin and planned to accept it as payment. That announcement added legitimacy to the cryptocurrency as an increasingly acceptable form of payment and investment, especially coming from a large member of the S&P 500 with a high-profile CEO who commands a big following among retail investors and the general public. Tesla’s website earlier also had a support page dedicated to Bitcoin, noted that Bitcoin was the only cryptocurrency that Tesla accepts in the continental U.S.
The tweet cause a slide in the value of the cryptocurrency, as much as 15% in Asian trading, sliding below $50,000, before paring some of the drop. It was down about 8% to $50,190 as of 10:53 a.m. in Tokyo, reports Bloomberg.
According to Coindesk, Bitcoin witnesses a -11.58% change in the last 24 hours as of 10:09 AM IST. Crypto-Twitter, however, wasn’t exactly pleased with this decision, since Dogecoin, the ‘other’ favorite cryptocurrency of Musk also didn’t a record a jump, and continued with a -10.06% in prices.
— Rajul Kosta (@rajulkosta09) May 13, 2021
Do it really sign as RIP Bitcoin if only one company suspended and still holding in good amount pic.twitter.com/vGL66TLNSl
— D- (@DevRider6) May 13, 2021
Some people also pointed out a little bit of hypocrisy from Musk’s tweets.
— Brent Walter (@BrentWalter323) May 12, 2021
We’re supposed to believe Elon JUST realized mining Bitcoin is bad for the environment? The dude’s hobby is fucking with global financial markets.
This is entertainment for him.
— Andrew Schulz HEZI (@andrewschulz) May 13, 2021
Elon … you realize that 75% of miners use renewable energy, right?This energy story has been debunked over and over again.
— Pomp (@APompliano) May 12, 2021
The news of Bitcoin also comes days after Musk hinted at the possibility of the electric car maker accepting the Dogecoin currency as a payment method for its vehicle. The Dogefather’s tweet comes just days after his commercial rocket company said it would accept the meme-inspired cryptocurrency as a payment method. Due to Musk’s affiliation with the Dogecoin currency, which began as a social media joke in 2013, Musk is also referred to in social media as the Dogefather. He has been one of the chief proponents of cryptocurrency in the corporate arena.
Tesla had bought $1.5 billion in bitcoin (BTC) last February and in March this year; it started accepting BTC as a payment method for its cars directly on its website. It holds the cryptocurrency as part of its reserves. Till now, it has sold 10% of its cryptocurrency holdings to prove its liquidity as an alternative to cash.