Bitcoin has gone into freefall after a bombshell announcement from Elon Musk.
On Twitter, the billionaire CEO said Tesla is suspending vehicle purchases using BTC because the company is concerned about the rapidly increasing use of fossil fuels for mining and transactions.
Musk stressed that Tesla has no plans to sell any more of its Bitcoin, and confirmed that the electric vehicle manufacturer is looking at other cryptocurrencies that use less than 1% of the energy that BTC does. He added:
“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.”
BTC’s price tumbled following the tweet on Wednesday evening — losing more than $2,000 in the space of 10 minutes.
The shockwaves didn’t end here, with Bitcoin heading to depths of $46,980.02 two hours later. That’s the lowest price seen in 30 days.
Down more than 10% over the past 24 hours, the world’s biggest cryptocurrency now faces a battle for survival as it struggles to cling on to $50,000.
The announcement from Musk has left many crypto watchers scratching their heads. Concerns about Bitcoin’s energy consumption are nothing new — and it seems unlikely that Musk would have been unaware about this when Tesla invested $1.5 million in BTC about three months ago.
Musk attempted to counter this point by sharing a chart from the Cambridge Centre for Alternative Finance that suggests Bitcoin’s estimated electricity consumption on an annualized basis has risen by 41% since the start of the year… hitting 149.63 TWh. (The exact number is hard to pin down, and academics say it could be in a range of 46.83 to 514 TWh.)
Hours before the announcement, a Reuters report claimed that Tesla is seeking to enter the multibillion-dollar U.S. renewable credit energy market — unlocking new revenue streams. It’s possible that Musk’s move could be an attempt to paint the company in a more favorable light as the Biden administration considers its application.