Electric car maker Tesla will stop accepting Bitcoin as a payment, CEO Elon Musk tweeted on Wednesday, citing .
"We are concerned about rapid increasing use of fossil fuels for Bitcoin mining and transactions, especially coal, which has the worst emissions of any fuel," Musk said on Twitter. He added that cryptocurrency is a "good idea on many levels" but its promise cannot come at a "great cost to the environment."
Tesla, he added, won't be selling any of the Bitcoin it owns. The price of Bitcoin fell about 5% to $51,847 after Musk's comments on Twitter. Tesla's stock finished Wednesday down 4.4%.
Wedbush Securities analyst Dan Ives called Musk's about-face "head-scratching."
"Tesla accepting transactions Bitcoin was viewed as a major step for the crypto market, as now Tesla's/Musk reversal will have a short-term negative impact on Bitcoin and the crypto landscape as the market digests this confusing news from one of its biggest supporters, Musk," Ives told investors in a note.
A 2019 study by researchers at the Technical University of Munich and the Massachusetts Institute of Technology concluded that, in late 2018, the entire Bitcoin network was responsible for up to 22.9 million tons of CO2 per year — similar to a large Western city or an entire developing country like Sri Lanka. Total global emissions of the greenhouse gas from the burning of fossil fuels were about 37 billion tons last year.
Bitcoin relies on computers, which rely on electricity, to exist. The number of computers and the energy needed to power them is rising — the growing value of Bitcoin is directly tied to the amount of energy it uses.
Despite these environmental concerns, Tesla said in February that it had invested around $1.5 billion in Bitcoin and soon planned to beginas payment for vehicles. The market value of Tesla's Bitcoin holdings as of March 31 was nearly $2.5 billion, according to securities filings.
Tesla's profits hit $438 million in the first three months of the year, the company's best ever earnings for a single quarter. But early a quarter of those profits, or $101 million, came from selling a portion of the company's stake in bitcoin.
Excluding the company's gain on Bitcoin and a separate regulatory credit, Tesla's core business of selling cars and solar panels actually lost $25 million in the quarter, according to JPMorgan Chase analyst Ryan Brinkman.