Bitcoin and Dogecoin decline after Elon Musk withdrew Tesla’s support for crypto transactions
In a Twitter post, Musk quoted the environmental impact of Bitcoin mining, which critics have described as energy-intensive and harmful to the climate.
The move surprised cryptocurrency enthusiasts and drove the price of Bitcoin down after hours, with the volatile digital currency falling over 13%. Other large crypto entities followed suit as investors considered how losing the support of a prominent financier would affect the performance of the asset class.
Musk said in his post that Tesla was “concerned about the rapidly increasing use of fossil fuels for bitcoin mining and transactions, particularly coal, which has the worst emissions of all fuels.”
“Cryptocurrency is a good idea in many ways and we believe it has a bright future, but it cannot result in huge environmental costs,” wrote Musk.
The development came as a shock to Tesla watchers as the auto company recently announced that it had put $ 1.5 billion worth of Bitcoin on its books and was starting to accept it for payment. This purchase announced in a government filing in February already achieved a “positive impact” of at least 100 million US dollars for Tesla, the company announced last month.
The move also sparked immediate excitement among Bitcoin investors – many of whom have Musk’s embrace of Dogecoin (DOGE). The latter collapsed by 20% after hours, along with Litecoin (LITE) and Ethereum (ETH), both of which went underground after Musk’s announcement.
Meme currency has skyrocketed in recent weeks as the billionaire publicly advocated his ascension – who returned to earth the weekend after Musk’s controversial appearance on “Saturday Night Live” when he called the unit a “crush”.
Still, big investors have slowly warmed up to the crypto sector as its profile has increased in the markets. Though legendary investors like Warren Buffett and Charlie Munger are still not fans, major investment banks have started to dip their toes Cryptocurrency as an investment option.
In fact, Shark-Tank investor Kevin O’Leary has given up his jaundiced view of Bitcoin. The chairman of the O’Shares ETF Yahoo Finance Live said recently that he has allocated 3% of his portfolio to the world’s largest cryptocurrency to Canada, and that a handful of other countries have eased restrictions on institutional purchases of the asset.
O’Leary said he now sees Bitcoin as digital gold and an inflation hedge that will appreciate over time, but warns that a big problem is brewing in the crypto space of how and where the coins are mined.
“I don’t own any random ETFs with blood coins in them,” O’Leary told Yahoo Finance. “The industry has done a bad job lobbying for sustainability.”
Javier David is an editor at Yahoo Finance. Follow Javier on Twitter: @TeflonGeek
This story is broken, please check back for updates.