Bitcoin, the world’s most common digital currency, dropped more than 7% in response to the tweet, trading at $US52,669 ($68,145), its lowest level since early March.
Tesla Inc announced in February that it had purchased $US1.5 billion in bitcoin before accepting it as payment for cars in March, causing the world’s most widely owned cryptocurrency to rise by roughly 20%.
Elon Musk stated that Tesla would not sell bitcoin and that it planned to use it for transactions until mining moved to a more sustainable energy source.
He tweeted, “We are also looking at other cryptocurrencies that use <1% of bitcoin’s energy/transaction.”
Elon Musk announced in March that Tesla customers would be able to purchase the company’s electric vehicles using bitcoin.
High-powered computers compete against one another to solve complex mathematical puzzles, an energy-intensive process that currently relies heavily on electricity produced from fossil fuels, especially coal.
According to the latest available data from the University of Cambridge and the International Energy Agency, bitcoin “mining” consumes about the same amount of energy annually as the Netherlands did in 2019.
Months ago, some investors questioned Tesla’s plans.
“We are of course very concerned about the level of carbon dioxide emissions generated from bitcoin mining,” said Ben Dear, chief executive of Osmosis Investment Management, a sustainable investment firm with $US2.2 billion in assets and Tesla stock in many portfolios.
Elon Musk’s reaction, according to Chris Weston, head of research at Melbourne broker Pepperstone, was a blow to bitcoin but an acknowledgment of the currency’s carbon footprint.
“Tesla has a reputation for being environmentally friendly, while bitcoin is simply the polar opposite,” Mr Weston said.
Traditional financial institutions are being chastised by Bitcoin supporters
Mr. Musk is a firm believer in digital currencies and a proponent of environmentally friendly technologies.
“Cryptocurrency is a good idea on many levels, and we believe it has a bright future,” he said. “However, this cannot come at the expense of the ecosystem.”
According to blockchain consulting firms, it is theoretically possible to trace bitcoin’s source, increasing the likelihood of a premium being paid for green bitcoin.
Governments all over the world will be able to contribute by enacting stronger climate change policies.
Some bitcoin supporters point out that the current financial system, with its millions of workers and machines in air-conditioned buildings, consumes a lot of resources as well.
The outspoken CEO has made several remarks on Twitter about cryptocurrencies and has chastised traditional money for having negative real interest rates.
In February, he said, “Only a fool wouldn’t look elsewhere.”
That month, his cryptic tweets “Doge” and “dogecoin is the people’s crypto” sparked a rally in the cryptocurrency dogecoin, which was developed as a parody of bitcoin and ethereum.
However, despite its recent popularity, dogecoin’s value plummeted after Mr Musk referred to it as a “hustle” during a guest appearance on Saturday Night Live a few days ago.