Why Did Elon Musk Stop Promoting Bitcoin?

There may still be people who might be wondering why bitcoin has dropped its value, and this is because of, none other than, Elon Musk. This may seem strange to some as just a few months ago, on the 8th of February, Tesla had made an announcement that they had bought $1.5 billion worth of cryptocurrencies, and that they would be accepting it as a form of payment. This one factor is the reason behind the sudden rise in the price of bitcoin this year.

This single announcement has made the value of bitcoin surge, however, it started going down when Elon Musk himself posted a tweet on a Thursday, on the 12th of May. He announced that the deal, in which Tesla would be accepting cryptocurrencies as payment, was off. This then contributed to the gradual fall of about $10,000 or around 20% of the value of bitcoin in just a span of 12 hours.

“Tesla has suspended vehicle purchases using bitcoin. We are concerned about rapidly increasing use of fossil fuels for Bitcoin mining and transactions, especially coal, which has the worst emission of any fuel…”, Musk tweeted.

Some crypto currencies e.g. OCryptoCanada may fear that this may pose a risk that can cause cryptocurrency’s fall as these types of remarks and withdrawals from well-known influential personalities can leave a bad reputation on the face of bitcoin and similar types of crypto assets as well. One single tweet from a highly influential and trusted individual such as Elon Musk can seriously damage the reputation of anything and anyone which may also be the same fear the users of cryptocurrencies are experiencing now.

This is true in many possible ways, however, Elon Musk’s withdrawal of his support on bitcoin stems from one reason, and that is the not-so-good side of it which is its astounding amount of energy consumption; most of them are produced by computers that are being used for bitcoin “mining” which are generated by fossil fuels. The annual energy consumption when mining these cryptocurrencies is around 148 terawatt-hours and it’s not stopping there from going upwards. And as Elon Musk had mentioned, some of this energy comes from coal.

During this time, Elon Musk had then been a target of shame and had been criticized for investing in cryptocurrencies and with this, people had also criticized him for this same reason that this can cause a large amount of damage to our environment due to its large electricity consumption which is obviously in conflict with Tesla’s mission.

Tesla is known for its advocacy for sustainable energy and fight against climate change. And the fact that the process in “mining” and making transactions using bitcoin involves the increase of fossil fuel consumption, this is obviously against what Elon Musk and Tesla are advocating for.

“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,” he added.

However, Musk also later on added that the time that mining cryptocurrencies transitions to a more sustainable energy, that Tesla would go back into accepting bitcoin as payment in purchasing Tesla cars. However, this may not happen the soonest possible time.

He also said that they are watching other crypto assets that are using less than one percent of bitcoin’s energy and transactions. This can be somewhat reasonable as the energy consumption of bitcoin is around 707 kwh per transaction which is 10 times more than that of ethereum which is at around 6.25 kwh. Other crypto assets consume less than these such as XRP, cardano, and dogecoin.

Musk’s tweets may be a subtle hint into supporting or promoting dogecoins which is a type of cryptocurrency that was initially launched as a satire about bitcoin but has since become a part of its world on its own and this can be due in part to the promotion of Elon Musk himself.

So what could be Musk’s goal or endgame in this? It could be that he wanted to wear down people’s interest in bitcoin due to its environmental impact or that he could just be messing with our minds just as Bloomberg’s Levine suggested. Whatever it may be, we have yet to find out.