{"id":114213,"date":"2021-05-13T03:44:53","date_gmt":"2021-05-13T03:44:53","guid":{"rendered":"https:\/\/fin2me.com\/?p=114213"},"modified":"2021-05-13T03:44:53","modified_gmt":"2021-05-13T03:44:53","slug":"teslas-musk-suspends-use-of-bitcoin-for-car-purchases","status":"publish","type":"post","link":"https:\/\/fin2me.com\/markets\/teslas-musk-suspends-use-of-bitcoin-for-car-purchases\/","title":{"rendered":"Tesla's Musk suspends use of bitcoin for car purchases"},"content":{"rendered":"

(Reuters) – Tesla Inc will no longer accept bitcoin for car purchases, Chief Executive Elon Musk said on Wednesday, citing long-brewing environmental concerns for a swift reversal in the company\u2019s position on the cryptocurrency.<\/p>

FILE PHOTO: Representations of virtual currency Bitcoin are seen in front of Tesla logo in this illustration taken, February 9, 2021. REUTERS\/Dado Ruvic<\/figcaption>

Bitcoin fell more than 10% after Musk tweeted his decision to suspend its use, less than two months after Tesla began accepting the world\u2019s biggest digital currency for payment. Other cryptocurrencies, including ethereum, also fell before regaining some ground in Asia trade.<\/p>\n

The use of bitcoin to buy Tesla\u2019s electric vehicles had highlighted a dichotomy between Musk\u2019s reputation as an environmentalist and the use of his popularity and stature as one of the world\u2019s richest people to back cryptocurrencies.<\/p>\n

Some Tesla investors, along with environmentalists, have been increasingly critical about the way bitcoin is \u201cmined\u201d using vast amounts of electricity generated with fossil fuels.<\/p>\n

Musk said on Wednesday he backed that concern, especially the use of \u201ccoal, which has the worst emissions of any fuel.\u201d<\/p>\n

\u201cCryptocurrency is a good idea on many levels and we believe it has a promising future, but this cannot come at great cost to the environment,\u201d he tweeted. Tesla shares fell 1.25% after hours.<\/p>\n

Tesla revealed in February it had bought $1.5 billion of bitcoin, before accepting it as payment for cars in March, driving a roughly 20% surge in the cryptocurrency.<\/p>\n

Tesla would retain its bitcoin holdings with the plan to use the cryptocurrency as soon as mining transitions to more sustainable energy sources, Musk said.<\/p>\n

Bitcoin 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.<\/p>\n

At current rates, such bitcoin \u201cmining\u201d 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.<\/p>\n

Some investors cast doubt on the use of bitcoin for Tesla purchases months ago.<\/p>\n

\u201cWe are of course very concerned about the level of carbon dioxide emissions generated from bitcoin mining,\u201d Ben Dear, CEO of Osmosis Investment Management, said in February, shortly after Tesla\u2019s bitcoin holdings became public. Osmosis is a sustainable investor managing around $2.2 billion in assets that holds Tesla stock in several portfolios.<\/p>\n

Currency trading analysts said Musk\u2019s tweets on Wednesday were inevitable.<\/p>\n

\u201cThe environmental impact from mining bitcoins was one of the biggest risks for the entire crypto market,\u201d said Edward Moya, a senior market analyst at currency trading firm OANDA. \u201cOver the past couple of months, everyone disregarded news that Bitcoin uses more electricity than Argentina and Norway.\u201d<\/p>\n

Mark Humphery-Jenner, an associate professor of finance at the University of New South Wales, said he was was more concerned about Tesla management\u2019s precipitious decision-making, given the environmental concerns were well known \u201cbefore Tesla accepted bitcoin.\u201d<\/p>\n

CRYPTOCURRENCY SUPPORT<\/h2>\n

Some bitcoin proponents note that the existing financial system – with its millions of employees and computers in air-conditioned offices – uses large amounts of energy too.<\/p>\n

Musk reiterated he remained a strong believer in cryptocurrencies.<\/p>\n

\u201cWe are also looking at other cryptocurrencies that use <1% of bitcoin\u2019s energy\/transaction,\u201d he tweeted on Wednesday.<\/p>\n

Just a day earlier, Musk had polled Twitter users on whether Tesla should accept dogecoin, a currency he has helped turn from a joke into a valuable commodity.<\/p>\n

He announced on Sunday that his commercial rocket company SpaceX will accept dogecoin as payment to launch a lunar mission next year – just hours after he sent the crytocurrency spiralling downward when he called it a \u201ca hustle\u201d during a guest-host spot on the \u201cSaturday Night Live\u201d comedy sketch TV show.<\/p>\n

CHINA DOMINANCE<\/h2>\n

The dominance of Chinese bitcoin miners and lack of motivation to swap cheap fossil fuels for more expensive renewables could mean there are few quick fixes to the crytocurrency\u2019s emissions problem.<\/p>\n

Chinese miners account for about 70% of bitcoin production, data from the University of Cambridge\u2019s Centre for Alternative Finance shows. They tend to use renewable energy – mostly hydropower – during the rainy summer months, but fossil fuels – primarily coal – for the rest of the year.<\/p>\n

Officials in Beijing are conducting a check on data centres involved in cryptocurrency mining to better understand their impact on energy consumption, sources told Reuters last month.<\/p>\n

In theory, blockchain analysis firms say, it is possible to track the source of bitcoin, raising the possibility that a premium could be charged for green bitcoin.<\/p>\n

Source: Read Full Article<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

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