Why is Elon Musk saying NO to bitcoins? CEO changes mind on allowing cryptocurrency as payment for Tesla cars

Tesla has suspended the use of bitcoins to buy its electric vehicles as CEO Elon Musk raised concerns over 'the use of fossil fuels' to mine and transact in Bitcoin


                            Why is Elon Musk saying NO to bitcoins? CEO changes mind on allowing cryptocurrency as payment for Tesla cars
Tesla CEO Elon Musk suspended vehicle purchases using bitcoins (Getty Images)

Have a few million bitcoins lying around? Planned to purchase a Tesla using that cash? If you did, you'll have to put those plans on the back burner as Tesla has announced it will no longer accept the cryptocurrency as payment. The shocking move comes days after Tesla CEO Elon Musk asked his Twitter followers if Tesla should accept dogecoin, another cryptocurrency, along with bitcoin.

The company began accepting bitcoins as a mode of payment for its vehicles in March, just 49 days ago. The move was a huge financial success for Telsa, as it ended up with a $1.5 billion stash. It even sold some of that to help pad its profits in Q1. The cryptocurrency ban isn't permanent, Musk intends to accept some other cryptocurrencies in the future as well, including bitcoin, but only if it addresses his environmental concerns. When you run an electric vehicle (EV) business, the environment is naturally a major concern. Unlike others, Musk's concerns don't just start and end with his business, but really expand to all facets of his life. Bitcoin is just the latest. 

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Elon Musk addresses a press conference on October 23, 2015 in Beijing, China. (Getty Images)

Why won't Tesla accept bitcoins?

According to Musk's Twitter statement, "We are concerned about the rapidly increasing use of fossil fuels for Bitcoin mining and transactions." He adds, "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." The company is also “looking at other cryptocurrencies that use <1% of Bitcoin’s energy/transaction." 

However, Musk said Tesla will not be selling any Bitcoin and they intend to use it for transactions as soon as mining transitions to more sustainable energy.



 

 

Musk isn't entirely wrong. According to Digiconomost, Bitcoin consumes as much electricity annually as The Netherlands and has a carbon footprint comparable to Singapore. It isn't an accident though, cryptocurrencies are meant to be energy-hungry by design. Here's a simplified version of why, as explained by The Verge: "Without a bank’s security systems, bitcoin records are kept safe and accurate by requiring miners to solve ultra-complex numeric problems. Miners need energy-hungry machines to solve those problems, It’s a system called “proof of work” that’s deliberately difficult in order to dissuade people from trying to take over or corrupt the records. It also gets expensive to mine bitcoin because of the cost of the machines and all of the energy they guzzle." 

As you can see, the very nature of cryptocurrencies is at odds with Tesla's mission. It's surprising Musk even agreed to accept bitcoins in the first place, given that this information isn't new. Others though have also slammed Musk for taking a very one-sided approach to the matter.

SpaceX owner and Tesla CEO Elon Musk arrives on the red carpet for the Axel Springer Award 2020 on December 01, 2020 in Berlin, Germany. (Getty Images)

'He just realized Bitcoin is bad for the environment?'

One Twitter user replied to Musk, "If you're concerned about the environmental impacts you should sell all your Bitcoin which will increase the supply thus reducing the price, the rewards for mining, and the energy expended claiming them".

Entrepreneur Cameron Winklevoss said, "When Elon realizes that bitcoin mining is actually pushing the renewable energy industry forward, he will refresh position and #bitcoin will moon." Another slammed Musk saying, "We’re supposed to believe Elon JUST realized mining Bitcoin is bad for the environment?  The dude’s hobby is f---- with global financial markets. This is entertainment for him." One person joked, "Can't wait for Tesla to stop accepting US dollars because it has such a negative impact on the environment!"



 

 

 



 

 

 



 

 



 

 

"Musk might be a sociopath the way he’s been trying to manipulate the markets. Mining and processing of lithium which Tesla’s run on are far more environmentally harmful, but let’s talk about #Bitcoin" said one user. Another noted, "Musk lecturing everyone on #Bitcoin's environmental impact while he jets around in his Gulfstream. Rules for thee but not for me."



 

 



 

 

It wasn't just Twitter that reacted to his announcement. Musk managed to singlehandedly drop the price of Bitcoin with his one tweet. As of the time of writing, the currency's value has fallen 11.79% in the last 24 hours. It should recover soon, but the real question is when will Tesla begin accepting crypto again? Especially after Musk tweeted about Dogecoin, which he seems quite close to. 

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