Tesla stock & bitcoin drop as Musk reverses course on accepting crypto for vehicles over climate concerns

Tesla Inc has suspended the use of bitcoin to purchase its vehicles, Chief Executive Officer Elon Musk said in a tweet on Wednesday, citing concerns about the use of fossil fuel for bitcoin mining.

Bitcoin, the world's biggest digital currency, fell more than 11 percent after the tweet and was trading at $50,480, at the time of publishing this copy.

Meanwhile, the stock of Tesla dropped 4.42 percent to close at $589.89 on Nasdaq.

Musk said Tesla would not sell any bitcoin and intends to use bitcoin for transactions as soon as mining transitions to more sustainable energy.

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

Tesla & Bitcoin pic.twitter.com/YSswJmVZhP

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— Elon Musk (@elonmusk) May 12, 2021

Musk said in March Tesla that customers can buy its electric vehicles with bitcoin.

The digital currency is created when high-powered computers compete against other machines to solve complex mathematical puzzles, an energy-intensive process that currently often relies 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.

Musk himself is a strong believer in digital currencies while also advocating for clean technology.

"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.

(with inputs from Reuters)