Elon Musk Says Tesla Has Suspended Accepting Bitcoin for Vehicle Purchases -- Update
May 12 2021 - 8:25PM
Dow Jones News
By Rebecca Elliott and Paul Vigna
Tesla Inc. Chief Executive Elon Musk said the company has
suspended accepting bitcoin as payment for its vehicles.
"We are concerned about rapidly increasing use of fossil fuels
for Bitcoin mining and transactions, especially coal," Mr. Musk
said Wednesday on Twitter.
Bitcoin's value against the dollar fell more than 5% after Mr.
Musk's tweet.
Tesla earlier this year began to accept the cryptocurrency as
payment for products sold in the U.S. The company also made a big
financial bet on bitcoin when it bought $1.5 billion worth of the
cryptocurrency in the first quarter. Tesla has since sold some of
those holdings, a move that boosted first-quarter earnings.
Tesla Chief Financial Officer Zach Kirkhorn has said the company
opted to invest in bitcoin when it was looking for a place to store
cash it didn't immediately need as a way to preserve liquidity
while also earning a return.
Mr. Musk said the company wouldn't sell any bitcoin and would
resume using the cryptocurrency for transactions "as soon as mining
transitions to more sustainable energy." Tesla didn't immediately
respond to a request for comment.
Tesla's earlier decision to accept bitcoin was a boost for the
cryptocurrency, which wasn't accepted widely in its early years. In
2014 and 2015, a number of companies, including Dell Technologies
Inc., Microsoft Corp., Overstock.com Inc. and Expedia Group Inc.
experimented with bitcoin payments. Most quietly dropped it for
lack of use. Last year PayPal Holdings Inc. opened its platform to
bitcoin, allowing its millions of U.S. users to sell, buy and hold
cryptocurrencies.
Questions around the environmental footprint of bitcoin are
largely linked to how the cryptocurrency is created. Bitcoin
operates across a network of linked but independent computers that
process transactions in exchange for newly minted bitcoin. Those
computers compete with each other to win those bitcoins by
participating in an energy-intensive competition to solve a random
math puzzle. The more computers on the network, the more difficult
the puzzle, the more energy needed to beat the other computers.
The mechanism behind bitcoin allows it to operate without any
centralized party in control, such as a central bank. But the
process to create the digital currency has raised concerns that
bitcoin's rise could have a larger environmental impact than other
such cryptocurrencies as more computers are deployed to find
bitcoin, sucking in more electricity.
Bitcoin mining consumes about 148 terawatts-hours of energy
annually, the Cambridge Centre for Alternative Finance estimates.
That is more than Sweden uses in a year. However, the center also
says that the energy bitcoin uses is equal to about 1 1/2 years'
worth of wasted energy in the U.S. just from devices left plugged
in to outlets.
Some bitcoin proponents dispute that bitcoin wastes as much
energy as its critics say, and several, in the minutes after Mr.
Musk's tweet, took issue with his statement.
Mr. Musk has repeatedly expressed support for the cryptocurrency
and, at one point, had a bitcoin reference in his Twitter
biography.
He is also closely associated with the cryptocurrency dogecoin,
created in 2013 as a joke. In a sketch on "Saturday Night Live"
this past weekend, cast members pressed Mr. Musk to explain what
dogecoin was. Mr. Musk, who was hosting the show, eventually said,
"Yeah, it's a hustle." The price of the cryptocurrency has since
fallen.
On Wednesday, Mr. Musk said in his tweet, "Cryptocurrency is a
good idea on many levels, and we believe it has a promising future,
but this cannot come at great cost of the environment." The company
was looking at other cryptocurrencies, he said, that consume less
energy.
Write to Rebecca Elliott at rebecca.elliott@wsj.com and Paul
Vigna at paul.vigna@wsj.com
(END) Dow Jones Newswires
May 12, 2021 20:10 ET (00:10 GMT)
Copyright (c) 2021 Dow Jones & Company, Inc.
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