Cryptocurrencies Take Horrific Nosedive after Elon Musk’s Latest Move

Many cryptocurrencies including Bitcoin, Ether, and Dogecoin, saw their prices plummet on Wednesday and into Thursday after Tesla’s CEO Elon Musk announced that the company would not be taking Bitcoin as payment anymore.

In a tweet on Wednesday, Musk cited concerns about “rapidly increasing use of fossil fuels for Bitcoin mining and transactions.” He indicated that Tesla might accept other cryptocurrencies if they are much less energy intensive.

According to a recent Citigroup Inc. repprt, mining for Bitcoin is consuming 66 times more electricity than it did back in late 2015.
He made sure to note that the company won’t be selling any of the Bitcoin it holds. Tesla has a $1.5 billion investment in Bitcoin.

It was in February that Tesla had said that it purchased $1.5 billion in Bitcoin and planned to accept it as a payment. That announcement gave optimism to crypto proponents that cryptocurrency can be seen as an increasingly acceptable form of payment and an investment.

Especially with Tesla being a large member of the S&P 500 with a high-profile CEO.

Cathie Wood’s Ark Investment Management LLC published a report in April saying cryptocurrency mining can drive investment in solar power and make more renewable energy available to the grid. Twitter Inc.’s Jack Dorsey commented that Bitcoin “incentivizes renewable energy” to which Musk replied “True.”

Nic Carter, founding partner at Castle Island Ventures, and a leading voice among defenders of Bitcoin’s energy use has said of Musk’s move, “Surely he would have done his diligence prior to accepting Bitcoin? Very odd and confusing to see this quick reversal.”

Tesla CFO Zachary Kirkhorn had said in April that the company in Bitcoin’s long-term value and planned to accumulate the tokens from transactions with customers.

The electric vehicle maker’s first-quarter earnings were bolstered by the sale of 10% of its Bitcoin holdings.