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Bitcoin Slumps as Elon Musk Pulls Support

By Danny Vena - May 12, 2021 at 8:23PM

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The enigmatic CEO appears to have had a change of heart.

Bitcoin (BTC 3.60%) and Tesla (TSLA 4.67%) both slumped in after-hours trading after a critical tweet by CEO Elon Musk. The popular cryptocurrency fell by more than 6%, while Tesla stock dipped a more modest 4%, as of this writing.

In a statement posted on Twitter (NYSE: TWTR), Musk said that Tesla was suspending vehicle purchases made using the popular cryptocurrency. He cited the "rapidly increasing use of fossil fuels for Bitcoin mining and transactions," specifically calling out coal, "which has the worst emissions of any fuel." Musk touted cryptocurrency as being "a good idea on many levels and we believe it has a promising future," but expressed concerns about the "great cost to the environment."

Bitcoin with a downward red graph showing decline.

Image source: Getty Images.

Bitcoin holders immediately fired back on Twitter, arguing that many miners used renewable energy, while others pointed out that there was no incremental energy used to facilitate a Bitcoin transaction.

Musk has long been a proponent of Bitcoin. In a recent regulatory filing, Tesla divulged that it held roughly $1.5 billion in Bitcoin on its balance sheet and had begun accepting the digital asset as a payment method.

The move comes just weeks after Cathie Wood's ARK Investment Management teamed up with Square (NYSE: SQ) to release a white paper that argued that Bitcoin mining could actually be good for the planet.

Wood tweeted that the research sought to "debunk the myth that Bitcoin mining is damaging the environment. Instead, as crypto mining, energy storage, and [artificial intelligence] technologies converge, the adoption of renewable energy is likely to accelerate!" 

The crux of the argument was that Bitcoin mining actually "incentivizes" the use of renewable energy, according to a tweet by Square and Twitter CEO Jack Dorsey. 

Just last weekend, a joke by Musk and his mother on Saturday Night Live caused meme-inspired Dogecoin (DOGE 2.66%) to plummet more than 25%.

 

Danny Vena owns shares of Bitcoin, Square, and Tesla. The Motley Fool owns shares of and recommends Bitcoin, Square, Tesla, and Twitter. The Motley Fool has a disclosure policy.

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Stocks Mentioned

Tesla, Inc. Stock Quote
Tesla, Inc.
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Bitcoin
BTC
$24,805.18 (3.60%) $862.82
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DOGE
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