Elon Musk says Tesla will no longer accept Bitcoin over energy use worries

EV manufacturer says climate concerns have prompted sudden U-turn on cryptocurrency

Thursday, 13th May 2021, 10:36 am
Elon Musk said concerns over energy production for Bitcoin mining had prompted the decision to suspend its use
Elon Musk said concerns over energy production for Bitcoin mining had prompted the decision to suspend its use

Tesla will no longer accept Bitcoin in payment for its vehicles, according to a statement from chief executive Elon Musk.

Musk said that concerns over the environmental impact of Bitcoin mining meant the electric car firm would suspend vehicle purchases using the cryptocurrency.

Bitcoin values fell by as much as 17 per cent following the announcement on Wednesday night, with Tesla’s share price also dipping.

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Bitcoin's value has soared in recent years but its mining is energy intensive

Tesla announced in March that it would begin accepting Bitcoin in payment for its range of all-electric models including the Model 3, Model S and Model X shortly after the firm revealed it had invested $1.5 billion in the digital currency.

However, in a statement shared via Twitter, Tesla’s self-styled “technoking” said that while he supported the concept of cryptocurrency it “cannot come at great cost to the environment”.

Musk said: “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.

“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.”

Musk said that Tesla would not sell any of its existing Bitcoin stake, and was “looking at” other digital currencies which he said used less than one per cent of Bitcoin’s energy per transaction.

Observers have said that the move could be an effort by Tesla to maintain its image as a “clean energy” firm and appease shareholders unhappy at its recent involvement with digital currency. However, it has also been suggested that it could be an effort by Musk to influence the cryptocurrency market. Bitcoin values jumped 15 per cent in February after Tesla announced its investment and Dogecoin, which started as a joke currency, saw a significant rise in value after Musk began tweeting about it.

Julia Lee from Burman Invest told the BBC: "Environmental, social and corporate governance (ESG) issues are now a major motivation for many investors. Tesla, being a clean energy-focused company, might want to work better in the environmental area of ESG.

"But a cynic might suggest that this is just another move by Elon Musk to influence the cryptocurrency market, as he has done on so many other occasions.”

Tesla’s interest in Bitcoin sparked controversy when it was announced due to the huge energy demand created by bitcoin mining. The digital currency is generated or “mined” by high-powered computers carrying out complex calculations. These computers use vast amounts of electricity - thought to be as much as the energy usage of Norway - and around 70 per cent of all Bitcoin is mined in China where server centres rely heavily on fossil fuel power stations.