The world’s largest cryptocurrency, Bitcoin, experiences a fall in price rapidly after a misguided tweet by Elon Musk, early morning on Thursday, May 13.
Bitcoin witnessed a huge down curve in its price from around $54,819 to $45,700 in under two hours after Elon Musk’s tweet.
- Bitcoin experienced its biggest drop since February, after Elon Musk’s tweet on Friday.
- Elon Musk tweeted; Tesla will not be accepting payments through Bitcoin.
- At the end of the day, Bitcoin somehow managed to regain its position by climbing 2.9%.
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It’s been a while since Elon Musk has shown keen interest in cryptocurrencies. From time and then, he has been promoting the use of cryptocurrencies. Elon Musk and Tesla both have shown a bullish behaviour towards Bitcoin.
Earlier this year, Tesla announced that the company had invested in $1.5 billion worth of Bitcoins. Also, Tesla would accept Bitcoins as a payment method for purchasing cars.
This led to Bitcoin’s price soar high rapidly.
But after Elon Musk’s tweet on May 13, everything went the opposite way.
Summary of the tweet:
- Tesla will not accept Bitcoins for purchasing Tesla cars.
- The reason behind this decision is care for the environment.
- A process known as mining, used in the transaction of cryptocurrencies, uses a huge amount of electrical power.
- Most of the electric power is generated in the world by burning fossil fuels.
- This leads to huge emissions and exhaustion of fossil fuels.
- Bitcoin is the oldest and biggest cryptocurrency, uses a fairly large amount of electricity.
However, musk also added that:
- Tesla will not be selling any of its purchased Bitcoins.
- They will use the cryptocurrency when it switches to cleaner sources of energy.
- The company is also looking for other alternatives (cryptocurrencies), which use less energy for the transaction.
Aftermath of the tweet by Elon Musk
After this tweet, the whole market was in shock. Bitcoin price fell from around $54,819 to $45,700, which is massive.
Elon Musk was getting trolled and criticised for this action.
This indeed showed a reversion in the behaviour of Elon Musk for Bitcoin. Earlier, they announced purchasing Bitcoins worth $1.5 billion, which led to an increase in the market price of Bitcoin.
Elon Musk Speaks about ‘Dogecoin’
Recently, we have seen Elon Musk being the unofficial brand ambassador for the meme cryptocurrency “Dogecoin”.
Tweets from Musk, referred to ‘Dogecoin’ as a hustle on Saturday Night Live (SNL), tumbled about a third after this.
Soon after, in another tweet, which said, “Working with Doge devs to improve system transaction efficiency. Potentially promising,” this led to an increase in the price of the meme crypto from $0.43 to $0.52.
The energy required for transaction through Dogecoins consumes nearly 0.12kWh of electricity per transaction, while Bitcoin consumes 707, which is very high.
Tesla halting the use of Bitcoin for purchase may seem that they are tending to incline more towards Dogecoin due to its efficiency in terms of energy use, ease of use and suitability as a currency.
But nothing can be said at the moment as all it takes is a tweet from Elon Musk to influence the whole market.
Also, many of Tesla’s investors looked up to this decision as a good one because of environmental concerns.
Bitcoin is created by a process called mining, which requires high-power computers for solving complex mathematical equations. In this process, a lot of energy is consumed by computers.
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Whatever be the reason, but the above situation is indeed a sign of concern as the world is already suffering from pollution and global warming.
Maybe, Elon Musk must have some other prominent reasons for suspending the use of Bitcoin; who knows!
And not only for Bitcoin, but other cryptocurrencies also use some amount of energy for transactions.
So, it is a point worth noting.
I hope you all enjoyed reading the article.
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