Tesla Changed its Position Regarding Bitcoin
Elon Musk is no stranger to unusual ideas but his announcement on Wednesday surpassed many of his previous ideas. His company decided to change its stance regarding the world’s largest cryptocurrency. Tesla will no longer accept bitcoin as a form of payment due to the impact of bitcoin mining on the environment.
Bitcoin is maintained by a network of so-called “miners”. They use purpose-built computers that require a lot of energy to handle mathematical puzzles for bitcoin transactions to go through. This cryptocurrency consumes more energy than some individual countries.
Musk’s announcement had a tremendous impact on the cryptocurrency market. At around 6 p.m. on Wednesday he made the announcement, the value of the whole cryptocurrency market stood at around $2.45 billion. Nevertheless, by 8:45 p.m. the market capitalization fell to around $2.06 trillion. Hundreds of billions of dollars were wiped off the entire market after his tweet.
It was hard to imagine that Tesla would change its position as several months ago, the company bought $1.5 billion worth of bitcoin. The company also stated that it would accept bitcoin as a payment method for its products. Support for cryptocurrency from Tesla helped to boost the price of cryptocurrencies including bitcoin and dogecoin.
Tesla was not alone as other companies also embraced cryptocurrencies. Mainstream investors and some corporate buyers regarded cryptocurrencies as a potential inflation hedge while central banks print money to support economies. Main Wall Street banks like Goldman Sachs and Morgan Stanley also sought to provide their wealthy customers with bitcoin exposure.
Bitcoin, Tesla, and dogecoin
While the carmaker said it would not accept bitcoin for vehicle purchases, the company plans to keep the bitcoin it owns at the moment The company also plans to explore other cryptocurrencies that require less energy for transactions.
During the first quarter of the year, Tesla bought $1.5 billion worth of bitcoin, then sold $272 million worth. Profits from bitcoin sales specifically allowed Tesla to notch a $101 million “positive impact” toward profitability.
Elon Musk supports cryptocurrencies, and he is a big fan of bitcoin and dogecoin. Several days ago, he made his hosting debut on “Saturday Night Live”. Musk did not forget to talk about dogecoin. Instead of helping to drive up the price of dogecoin, it actually fell 30% over the course of an hour that he was hosting SNL.
