From money laundering and capital flight to its carbon footprint, Bitcoin is falling in the crosshairs of regulators.
Tesla has suspended vehicle purchases using Bitcoin, citing concerns over the cryptocurrency’s effect on the climate, the company’s CEO Elon Musk announced on Twitter.
“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,” Musk wrote on Wednesday.
Bitcoin, the world’s biggest digital currency by market capitalisation, fell nearly 8 percent after the tweet according to data from cryptocurrency exchange Coinbase.
“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,” Musk wrote.
The Tesla and SpaceX chief is a fervent supporter of cryptocurrencies and has inspired big market-moving swings in the prices of digital coins this year, including Bitcoin and Dogecoin.
Tesla & Bitcoin pic.twitter.com/YSswJmVZhP
— Elon Musk (@elonmusk) May 12, 2021
In January, Bitcoin surged when Musk posted #bitcoin to his Twitter feed. His Midas crypto touch was unleashed again in February after Tesla disclosed in regulatory filings that it had bought $1.5bn of Bitcoin and that people could use the cryptocurrency to buy Tesla’s electric vehicles.
As Bitcoin has scaled new heights this year, climate activists have been raising the alarm over the substantial amounts of energy consumed by Bitcoin mining. That is when mining rigs comprising powerful computers – sometimes thousands of them labouring in unison – race to verify Bitcoin transactions to win new coins.
Bitcoin mining consumes as much electricity annually as the entire country of Argentina, researchers at the University of Cambridge estimate, with China accounting for some 65 percent of Bitcoin mining globally.
That carbon footprint is at odds with Musk’s support for clean energy. But he is not giving up on Bitcoin.
In his tweet on Wednesday, Musk said Tesla would not sell any of its Bitcoin and that the electric vehicle maker intends to keep using the cryptocurrency for transactions “as soon as mining transitions to more sustainable energy”.
He also said that Tesla is looking at more energy-efficient cryptocurrencies.