According to a tweet from Tesla CEO Elon Musk on Wednesday, the company has “suspended vehicle transactions using bitcoin” due to concerns about the “rapidly growing use of fossil fuels for bitcoin mining.”
In the minutes following Musk’s announcement, the price of bitcoin fell by around 5%.
Tesla disclosed in a February SEC filing that it had purchased $1.5 billion in bitcoin and that it would invest in more bitcoin or other crypto currencies in the future.
The company announced at the time that it would begin accepting bitcoin as a payment method for its goods.
Tesla’s support for cryptocurrency has helped to drive up the prices of cryptocurrencies like bitcoin and dogecoin in recent months.
Here’s the full text of Musk’s announcement:
“Tesla has suspended vehicle purchases using Bitcoin. We are concerned about rapidly increasing use of fossil fuels for Bitcoin mining and transactions, especially coal, which has the worst emissions of any fuel. Cryptocurrency 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. Tesla will not be selling any Bitcoin and we intend to use it for transactions as soon as mining transitions to more sustainable energy. We are also looking at other cryptocurrencies that use <1% of Bitcoin’s energy/transaction.”
Quoting from CNBC, Bitcoin has attracted mainstream investors and some corporate buyers, including Tesla, Square, Metromile, and Nexon, who see the digital currency as a possible inflation hedge while central banks print money to support coronavirus-affected economies.
Major Wall Street banks such as Goldman Sachs and Morgan Stanley have also attempted to provide bitcoin exposure to their high-net-worth clients.
However, some investors, such as Softbank founder Masayoshi Son, are still skeptical of the cryptocurrency craze.
“There’s a lot of discussion over if it’s a good thing or a bad thing, what’s the true value or is it in a bubble. Honestly speaking, I don’t know,” Son said at a recent earnings conference.
Tesla Intends to Hold Bitcoin
Although Tesla announced on Wednesday that it will not allow bitcoin for vehicle purchases, Musk clarified that the company intends to keep rather than sell the bitcoin it already has and is looking into other cryptocurrencies with lower transaction energy requirements.
Tesla purchased $1.5 billion in “digital properties” in the first quarter of 2021, and sold $272 million of them.
Tesla said in a financial filing on April 26 that gains from bitcoin sales helped the company achieve a $101 million “positive effect” on profitability.
Read now: Elon Musk: Should Tesla Accept Dogecoin as Payment?
