Electric carmaker Tesla will no longer allow customers to pay for cars with bitcoin, CEO Elon Musk announced Wednesday, citing the vast amounts of electricity needed to “mine” the cryptocurrency — a reversal three months after Tesla pledged to start taking bitcoin as payment.
- In a Wednesday evening tweet, Musk said Tesla is concerned about “rapidly increasing use of fossil fuels for Bitcoin mining and transactions, especially coal.”
- The company will restart using bitcoin “as soon as mining transitions to more sustainable energy,” and it will look for less energy-intensive cryptocurrencies in the meantime.
- Tesla doesn’t plan on selling the $1.5 billion in bitcoin it bought in February, Musk said.
- Bitcoin’s price dropped about 5% shortly after Musk’s announcement, a fairly small dip for a cryptocurrency known for volatility.
“Cryptocurrency is a good idea on many levels and we believe it has a promising future, but this cannot come at great cost to the environment,” Musk said in a statement.
As bitcoin surges in price, some critics have warned the cryptocurrency consumes excessive amounts of energy. New units of cryptocurrencies like bitcoin are generated through a digital process known as “mining,” a potentially lucrative endeavor that requires computers to run trillions of operations, taking up lots of electricity. As more bitcoin is created, it becomes increasingly difficult to mine new units, requiring more processing power and more energy. As a result, researchers from the University of Cambridge estimate bitcoin uses more electricity than entire mid-size countries like Argentina and Pakistan.
Musk has spent months vocally boosting cryptocurrencies. Musk dubbed bitcoin “almost as bs as fiat money” on Twitter last year, but after Tesla disclosed its multibillion-dollar bitcoin purchase in February, he put extra emphasis on the word “almost,” arguing the cryptocurrency is somewhat better to hold than regular money. He’s also promoted dogecoin, a “joke” cryptocurrency whose price sometimes spikes after Musk tweets about it.
Last week, Musk said cryptocurrencies are promising but should still be considered speculative at this point, warning people to “invest with caution.”