Tesla stops use of bitcoin for car purchases

Tesla Inc will no longer accept bitcoin for car purchases, Chief Executive Elon Musk said on Wednesday.

Musk cited environmental concerns for a swift reversal in the company’s position on the cryptocurrency.

Bitcoin fell more than 10% after Musk tweeted his decision to suspend its use.

Other cryptocurrencies, including ethereum, also fell before regaining some ground in Asia trade.

The use of bitcoin to buy Tesla’s electric vehicles had highlighted a difference between Musk’s reputation as an environmentalist and the use of his popularity and stature as one of the world’s richest people to back cryptocurrencies.

Some Tesla investors, along with environmentalists, have been increasingly critical about the way bitcoin is “mined” using vast amounts of electricity generated with fossil fuels.

Musk said on Wednesday he backed that concern, especially the use of “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,” he tweeted. Tesla shares fell 1.25% after hours.

Tesla revealed in February it had bought $1.5 billion of bitcoin, before accepting it as payment for cars in March, driving a roughly 20% surge in the cryptocurrency.

Tesla would retain its bitcoin holdings with the plan to use the cryptocurrency as soon as mining transitions to more sustainable energy sources, Musk said.

Bitcoin is created when high-powered computers compete against other machines to solve complex mathematical puzzles, an energy-intensive process that currently often relies on electricity generated with fossil fuels, particularly coal.

At current rates, such bitcoin “mining” devours about the same amount of energy annually as the Netherlands did in 2019, the latest available data from the University of Cambridge and the International Energy Agency shows.

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