Elon Musk U-Turn on Bitcoin

Tesla Puts a Halt to Bitcoin Payments

Elon Musk withdrew his endorsement of bitcoin as he revealed that Tesla would no longer allow its customers to make payments in the form of the cryptocurrency.

 

He cited environmental concerns as one of the key reasons why he made this move. Specifically, he was concerned with the system of validating bitcoins, and the significant impact it has on the environment.

Musk revealed that had he not made this change, the reputation that Tesla has held over the years, especially in terms of its appeal to other firms, would get damaged.

Following the announcement, Bitcoin price fell to $46,045 on Wednesday. This is the lowest it has been since the beginning of March. On Thursday, it was still down by a whopping 9%, to end at $49,769.

Since embracing Bitcoin payment, Tesla has encountered sharp criticism, particularly from ESG investors who prefer ventures that are environmentally, socially and economically viable.

Musk’s endorsement for the controversial currency contradicted his efforts to preserve the environment, which he has always cited as the reason for venturing into the production of electric cars.

Back in February when Tesla announced that it would be accepting Bitcoin payments, the price of the cryptocurrency skyrocketed by 15% in a span of just 24 hours.

At the time, the company invested $1.5 bn in cash into bitcoin. The plan was to later on accept payment for its cars in form of the cryptocurrency.

Tesla’s endorsement of Bitcoin was a big deal because it served as a validation for the coin in the corporate industry. However, this move triggered a big uproar amongst corporate treasurers regarding the cryptocurrency.

When making the announcement regarding the withdrawal, Tesla mentioned that it would, however, consider working with other cryptocurrencies that have recorded less than 1% of the energy/ transaction recorded by Bitcoin.

Bitcoin uses a system referred to as “proof of work.”

Ether, which is ranked the second biggest cryptocurrency globally, revealed that it would be switching to a different technique known as “proof of stake.” This mechanism does not take up as much energy as others.

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