Bitcoin crashes as Elon Musk announces Tesla cars can no longer be bought with cryptocurrency

Tesla had previously purchased billions of dollars worth of the cryptocurrency

Elon Musk has announced that Tesla has suspended vehicle purchases using bitcoin, resulting in the cryptocurrency crashing.

“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”, the electric car company CEO tweeted.

“Cryptocurrency is a good idea on many levels and we believe it has a promising future, but this cannot come at a 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.”

Bitcoin fell from a daily high of £39,000 to around £37,190 in the immediate aftermath of the Tesla CEO’s tweet. The Independent has reached out to Tesla for comment.

The unexpected news comes after Mr Musk has been a prominent advocate for the cryptocurrency throughout the year. In March, the chief executive tweeted in the middle of the night US time: “You can now buy a Tesla with Bitcoin.”

He went on to clarify that Tesla would keep the money received as cryptocurrency, rather than converting it into a fiat currency such as dollars.

“Tesla is using only internal & open source software & operates Bitcoin nodes directly. Bitcoin paid to Tesla will be retained as Bitcoin, not converted to fiat currency,” he said in another tweet. “Pay by Bitcoin capability available outside US later this year.”

Mr Musk announced his support for the cryptocurrency in January this year, after changing his Twitter bio to “#bitcoin”, alongside its “B” symbol.

In January, bitcoin was worth around $30,000 and $40,000, and was worth $57,000 by March - meaning Tesla had made between $630 million and $1.35bn from its investment.

Mr Musk’s tweets will not be seen favourably by bitcoin advocates, especially due to its effect on the market. However, this is not the first time the CEO has been criticised for the financial ramifications of his tweets.

The US Securities and Exchange Committee forced Mr Musk to relinquish his role as Tesla chairman in 2018 as part of a series of concessions he made settling a lawsuit alleging he duped investors by tweeting about the price of Tesla stock.The Independent has reached out to the agency for comment.

Mr Musk tweeted in August that year that he was considering taking Tesla private at $420 per share. Three years later, it was reported he was under investigation by regulators over his posts about dogecoin - a fringe cryptocurrency that also rose (and dropped) in value, and which has been slammed for similar environmental drawbacks as bitcoin.

Bitcoin, the ninth most valuable asset in the world, now requires nearly as much energy as the entire country of Argentina.

“Bitcoin’s energy consumption has more than quadrupled since the beginning of its last peak in 2017 and it is set to get worse because energy inefficiency is built into bitcoin’s DNA,” Charles Hoskinson, CEO of leading cryptography firm IOHK, told The Independent.

The cryptocurrency had previously hit record values with both ethereum (ether) and cardano (ADA) hitting all-time price highs.

However, the Bank of England had warned that cryptocurrency had “no intrinsic value”, adding that people should “buy [cryptocurrency] only if you’re prepared to lose all your money.”