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Elon Musk reversed his support for bitcoin on Wednesday when he announced that Tesla was suspending plans to accept payment for its cars in cryptocurrency.
He put the mood shift on environmental concerns about the mechanism used to validate bitcoin transactions, pointing to a broader rethinking of the digital currency that could call into question its growing appeal among other companies.
Musk has faced acute toilets on Tesla’s support for Bitcoin, including ESG investors who prioritize environmental, social, and governance issues. The enthusiasm of Tesla’s chief executive for the energy-hungry currency ran counter to concerns about climate change that he has always said led to his involvement in electric cars.
The price of bitcoin jumped 15% in a single day in February after Tesla revealed it had placed $ 1.5 billion in corporate cash in digital currency and is expected to one day accept it in payment for their cars. The news was widely regarded as an important validation of bitcoin in the corporate world and provoked a debate among corporate treasurers on the use of currency.
In a brief statement released on Twitter on Wednesday, Musk said: “We are concerned [the] the rapidly increasing use of fossil fuels for mining and bitcoin transactions, especially coal, which has the worst emissions of any fuel. “
Bitcoin uses a “working test” mechanism, based on so-called miners who use large-scale groups of computers to break puzzles using a consensus algorithm.
Musk’s statement concluded by saying that Tesla “was looking at other cryptocurrencies that use <1% of bitcoin's energy / transaction," a comment that could provide a shot in the arm to digital currencies that use other ways to eat less power. to validate transactions.
Ether, the second most valuable cryptocurrency, has said it was moving to an alternative method known as the “participation test,” which does not depend on it. energy-hungry method.
Musk also seemed to swear to Tesla that he was actively negotiating with Bitcoin to increase its future profits. Investors in the company were surprised last month to discover that it had sold part of its holdings in cryptocurrencies in a few weeks for a Profit of $ 101 million. Along with sales of environmental credits, the profit from foreign exchange trading more than offset the loss of Tesla’s main vehicle manufacturing business in the first quarter of the year.
“We will not sell any bitcoin,” the head of Tesla said in his statement, though he gave no further light on how long the automaker will keep the cryptocurrency or whether it planned to put more cash.
The statement appeared to mark a withdrawal from the use of bitcoin in Tesla’s treasury operations. Company officials recently described its currency sales as proof of its liquidity, making it a suitable asset for treasurers, a consideration that would be undermined if Tesla stopped using it as a currency. source of liquidity.
The price of bitcoin fell about 4% after Musk’s statement.
Bitcoin investment could also cause a cloud dogecoin, the cryptocurrency that has experienced some of the biggest gains this year thanks, in large part, to Musk’s vociferous support. As with bitcoin, dogecoin uses a working test mechanism.
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