Crypto price collapse as Elon Musk announces Tesla will no longer accept payment with Bitcoin. Tesla had recently purchased $1.5 billion dollars of Bitcoin in 2021.

In a shocking and heartbreaking tweet by Tesla CEO Elon Musk who made the announcement via his twitter handle that Tesla has suspended vehicle purchases using Bitcoin, resulting in the cryptocurrency market crashing.

Elon Musk reveals that Tesla has suspended it’s electric-car purchases using Bitcoin. “We are concerned about rapidly increasing use of fossil fuels for Bitcoin mining and transactions, especially coal, which has the worst emissions of any fossil fuel”, Tesla CEO tweeted.

“Cryptocurrency is a good idea on many levels and we believe it has a promising future, but this cannot come at a great cost to the environment”.

“Tesla will not be selling any Bitcoin or converting it’s crypto into fiat currency and we intend to use it for transactions as soon as mining transitions to more sustainable energy. We are also looking at other cryptocurrencies that use <1% of Bitcoin’s energy.”

As for crypto price, Bitcoin fell by more than 10%, from $54,800 to $46,294, its lowest point in three weeks just after the tweet, while Tesla shares also incurred massive loss.

Also read: Nigeria is now the second-largest Bitcoin market in the world

In March 2021, Tesla announced that it would accept the cryptocurrency. The chief executive tweeted “You can now buy a Tesla with Bitcoin.” But this announcement came with serious oppositions and outcry from some environmentalists and investors.

The foremost electric car maker had earlier revealed it had bought $1.5bn (£1bn) of the world’s biggest digital currency.

What is Bitcoin mining?

Bitcoin mining is simply the process whereby new Bitcoins are brought into circulation. It is carried out using highly complex computers that are able to solve extremely complicated computational math problems.

Most of the energy supply used globally for Bitcoin mining activities is from coal powered power plants. Mining is an energy-intensive process that mostly relies on electricity generated with fossil fuel, which is coal. 75% of miners around the world are in China, most of these miners use cheap electricity produced from coal energy instead of expensive renewable energy.

According to a study, Bitcoin mining uses as much energy as the whole of Netherlands or Brazil.

Why the U-turn now which is causing crypto price collapse?

Elon Musk has been one of the world’s famous proponents of Cryptocurrency, often tweeting about Bitcoin and the meme-based Cryptocurrency “Dogecoin” which has now become the fourth biggest Cryptocurrency in the world. Last month, Tesla released its profits for the first three months of the year at $438million, up from $16million last year most of which came from gains of Bitcoin.

Tesla bought $1.5 billion in Bitcoin early this year. By the end of March, it was worth $2.5 billion. Musk tweeted in late March that people “can now buy a Tesla with Bitcoin” Musk, who has in the past cautioned investors and also expressed skepticism about cryptocurrencies, said in an interview on social app Clubhouse earlier this year that he thinks bitcoin is on the verge of “getting broad acceptance by conventional finance people.” He said he should have bought the digital currency eight years ago.

On Wednesday, Musk tweeted that Tesla still plans to use Bitcoin as payment after the digital currency finds alternative cleaner energy sources.

Also read: Bitcoin in Nigeria becoming a great currency adoption

On the other hand, conspiracists and market analysts are seeing this move by Elon Musk company as an attempt to ease the concerns of investors who are so keen on issues of climate change and environmental sustainability. Considering the fact that environmental and climate change issues are now a major motivation for investors in the US, Tesla might want to protect its integrity as a clean tech company.

Others are saying this move might just be one of Elon Musk moves to influence the Cryptocurrency market.

In conclusion

This announcement begs the question if Elon Musk was aware of the environmental effect of Bitcoin before investing a huge amount into crypto. However you want to look at this, other Cryptocurrency also suffered major hits including Ethereum which fell by nearly 10%, Dogecoin by 15%, Litecoin by 14%, and the much talked about ‘Dogecoin’ dropping a whopping 33% in the last 24 hours.

Updates

As at 17th of May 2021, about 290,647 Crypto traders got liquidated, with Huobi-BTC getting the largest single liquidation punch valued at $90 million.

Bitcoin price is currently hovering around $45,300 dropping below 20% over the weekend. The record sell-offs recently seen in the crypto market pushed Bitcoin’s market value down to $843 billion or about 40.11% of the total crypto market capitalisation, downsizing from an all time high market capitalisation of $1.18 trillion.

Major altcoins also took some blows, leading Cryptos like Ethereum recorded losses as it dropped below $3,600, Cardano, XRP, Internet Computer, and Polkadot all dropping by more than 10%.

Here are some major talking points and reactions by Crypto hodlers on twitter

Elon Musk has also reacted to the latest controversy that he’s gambling with the Crypto market. Many people suggest Tesla, who owns about $1.5 billion worth of Bitcoin has sold its coin, others are saying Tesla is secretly buying the dip. Elon has responded to these speculations.