Yerevan (CoinChapter.com) — Tesla suspended vehicle purchases using Bitcoin owing to concerns over climate change, company CEO Elon Musk said in a tweet.
The price of Bitcoin dropped about 17% following the tweet. This was the lowest the world’s largest cryptocurrency by market cap had reached since March 1.
“Tesla has suspended vehicle purchases using bitcoin. We are concerned about [the] rapidly increasing use of fossil fuels for Bitcoin mining and transactions, especially coal, which has the worst emissions of any fuel.” tweeted Musk.
The decision came less than two months after Tesla began accepting Bitcoin for payment. The announcement had created much buzz in the crypto industry, with many noting its ability to push Bitcoin further into the mainstream financial sector.
Bitcoin Bounces Back
However, the ripples created following Musk’s tweet did not last long. The value of Bitcoin jumped right back to about $50,000 in Asian trading soon after.
In February, Tesla had announced that it had bought $1.5 billion of bitcoin. The company “sold 10% of its holdings essentially to prove liquidity of bitcoin as an alternative to holding cash on its balance sheet,” according to Musk.
The company also announced that it would accept the much-coveted digital currency as payment for car purchases. Experts considered this announcement to be one factor behind the digital token’s surging prices earlier this year.
Climate Concerns Around Bitcoin
Miners create Bitcoin using high-powered computers to compete against each other to solve complex mathematical puzzles.
Mining Bitcoin is an energy-intensive process. Miners rely on high-powered computers to solve complex mathematical problems to generate Bitcoin. Fossil fuels that are harmful to the environment power these computers, including coal.
Musk faced the ire of many environmentalists in February when his company announced plans to accept Bitcoin as payment for cars.
This, of course, is no different from many traditional financial systems and industries. They, too, like Bitcoin, use environmentally harmful sources of energy to power production. Allegedly, Bitcoin “produces as much CO2 a year as a million transatlantic flights.”
However, Musk had tweeted on Monday asking his followers if Tesla should accept Dogecoin as payment. A whopping 78.2% had said yes.
Interestingly, Tesla has no plans to sell any bitcoin and has promised to resume accepting the biggest cryptocurrency should it be mined using sustainable energy sources.