Cryptocurrency market left awash after Elon Musk tweets Tesla’s decision on Bitcoin purchases

Charles Abuede

Elon Musk on Wednesday sent the cryptocurrency market into the red zone and triggering a slide in Bitcoin and other digital currencies after he disclosed Tesla, the electric vehicle maker, has taken a decision to suspend purchases using Bitcoin. Consequently, the largest traded cryptocurrency crashed by as much as 15 per cent to just above $46,000 before it retreated. Resultantly, other tokens such as Ether and Dogecoin also slid as a result of the crash; and as such, the rush to sell briefly caused outages at some cryptocurrency exchanges. Bitcoin is still up with over fivefold in the past year.

The Tesla CEO, in a Twitter post, cited concerns about the rapidly increasing use of fossil fuels for currency mining and transactions and signalling that Tesla might accept other cryptocurrencies if they are much less energy-intensive. “Though, Tesla won’t be putting up for sale its Bitcoin holdings,” Musk said.

The move by Musk comes after the electric vehicle maker disclosed in February that it had purchased $1.5 billion in Bitcoin and planned to accept it as payment. That announcement added legality to the digital asset as an increasingly acceptable form of payment and investment. Nevertheless, it can be said that a major factor or visible catalysts spurring the positive rally of the currency this year has been Tesla’s addition of Bitcoin to its balance sheet.

Further with the adoption by Tesla, few weeks on, there was growing optimism about the asset as Mastercard Inc., Bank of New York Mellon Corp. and other firms moved to make it easier for customers to use or invest in cryptocurrencies, fueling the mainstream resurgence that took Bitcoin from about $29,000 at the end of last year to as high as almost $65,000 in April. Musk has also tweeted frequently about Dogecoin, a cryptocurrency started as a joke in 2013 and making a wisecrack about being the “Dogefather”, like he tweeted on Tuesday, “Do you want Tesla to accept Doge?”

Meanwhile, Tesla’s website, which had a dedicated support page to Bitcoin, noted that the token was the only cryptocurrency that Tesla accepts across the United States. Musk’s tweet on Wednesday took many in the cryptocurrency community by surprise, including Nic Carter, founding partner at Castle Island Ventures, and a leading voice among defenders of Bitcoin’s energy use. But as reported by Citigroup Inc. recently, it noted that Bitcoin mining is consuming 66 times more electricity than it did back in late 2015, and the emissions of carbon associated with the mining process will likely face increasing scrutiny.