Bitcoin Slides 17% After Elon Musk Tweets On Tesla's Suspension Of Cryptocurrency Use

Elon Musk added that the Tesla would not sell any bitcoin and would resume accepting bitcoin as soon as mining transitioned to more sustainable energy.

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Even as the world economy is battered by the pandemic, the global cryptocurrency market is making noise. The price of the world's largest cryptocurrency slipped from almost 54,819 to $45,700, its lowest since March 1, within a span of less than two hours following the tweet by Tesla CE Elon Musk saying the company had stopped accepting bitcoin to purchase its vehicles citing climate concerns.

However, bitcoin rebounded to about $50,000 in Asian trading on Thursday after plunging as much as 17 per cent. The cryptocurrency managed to recover about half of that drop early in the Asian session, and last traded about $50,196, as per Reuters.

On the other hand, Ether, the second-largest cryptocurrency, followed a similar pattern, also dropping 14 per cent to touch a low of $3,550, before juming back to about $3,965. "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," Musk wrote.

Earlier this year, the company's announcement of buying $1.5 billion of bitcoin and that it would accept it as payment for cars became one of the factors behind the digital tokens' surging price. In the latest tweet, Musk added that the Tesla would not sell any bitcoin and would resume accepting bitcoin as soon as mining transitioned to more sustainable energy.

"We are also looking at other cryptocurrencies that use <1% of bitcoin's energy/transaction," Musk said.

What's the reason behind Musk's u-turn?

Musk reversed his stance stance due to criticism from some environmentalists and investors. The digital currency is processed through the high-powered computers that compete against other machines to solve complex mathematical puzzles. This energy-intensive process currently often depends on electricity generated with fossil fuels, particularly coal.

At current rates, such bitcoin “mining" devours about the same amount of energy annually as the Netherlands did in 2019, the latest available data from the University of Cambridge and the International Energy Agency shows.