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Cryptocurrency traders lose $360bn after Tesla rejects payments through bitcoins

Bitcoin investors were left stunned as at least $365 billion was wiped off their investments after Tesla’s founder, Elon Musk, announced that the car maker will not be accepting Bitcoin as payment for its cars.

Musk had tweeted that the electric car maker will suspend purchases using Bitcoin, citing environmental reasons, setting off a sell-off in the crypto market. All major cryptocurrencies had seen major setback in their prices with some losing as much as 18 per cent compared to Wednesday’s value.

Total crypto market capitalisation had likewise dropped and market capitalisation dropped to $2.1 trillion an 11.96 per cent decline from $2.43 trillion. The price of Bitcoin which was around $56,840 as at Wednesday afternoon had seen a sharp decline to $48,922 as at 10am on Thursday, as $7,918 was wiped away from its share price, a 14.17 per cent depreciation.

The price of Ethereum had declined by 13.29 to $3,728 while the price of Binance Coin and dogecoin had depreciated by 14.55 and 21.62 per cent in less than 24 hours.

On Tuesday, Musk had put up a Tweet survey asking followers if Tesla should receive Dogecoin as payment for its cars which many respondents answered yes.

By Thursday morning, Musk Tweeted that Tesla is “concerned about rapidly increasing use of fossil fuels for Bitcoin mining and transactions, especially coal, which has the worst emissions of any fuel.”

Bitcoin is not issued by a single entity like a central bank. Instead, it is maintained by a network of so-called “miners.” These miners use purpose-built computers that require a lot of energy to solve complex mathematical puzzles in order for bitcoin transactions to go through. Bitcoin’s energy consumption is larger than some individual countries.

“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 emissions of any fuel. Cryptocurrency is a good idea on many levels and we believe it has promising future but this cannot come at a great cost to the environment.

“Telsa will not be selling Bitcoin and we intend to use it for transactions as soon as mining transitions to more  sustainable energy we are also looking at other cryptocurrencies that use less than one per cent of Bitcoin’s energy/transaction,” Musk’s Tweet reads.

Musk, who has been a big proponent of digital currencies including bitcoin and dogecoin, helping to drive their prices higher in recent months, said the company will not be selling any bitcoin and intends to use it for transactions “as soon as mining transitions to more sustainable energy.”

Bitcoin has garnered interest in the last year as companies such as Square and Tesla announced bitcoin purchases and large institutional investors entered the cryptocurrency space.

Major investment banks like Goldman Sachs and Morgan Stanley have also sought ways to allow their wealthy clients to get bitcoin exposure.

 

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