Tesla Inc (NASDAQ:TSLA) CEO Elon Musk seems to be in control of the bitcoin price, at least unofficially. After a short time, the automaker announced that it would no longer accept the cryptocurrency as a method of payment, giving the reason as “great cost to the environment.”
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It’s been only three months since Musk announced that Tesla would start accepting bitcoin as payment for its cars. He also said the automaker wouldn’t sell its own bitcoin until miners converted to sustainable energy to run the computers required to create new tokens.
Tesla reverses course on bitcoin
After Musk tweeted that Tesla would no longer accept the cryptocurrency, its price dipped, falling from about $54,600 to $46,980, according to Coinmarketcap. Despite the temporary setback, the price has since recovered to around $50,000.
In a statement, Musk said they are “concerned about rapidly increasing use of fossil fuels for bitcoin mining and transactions, especially coal, which has the worst emissions of any fuel.” He added that cryptocurrency is “a good idea on many levels” and that he believes it has a “promising future, but this cannot come at great cost to the environment.”
According to The Washington Post, when Tesla initially invested $1.5 billion into the cryptocurrency in February and announced it would start accepting it as payment, environmental advocates criticized it. They pointed out the energy consumption and carbon emissions caused by mining cryptocurrency. When Musk said they would start accepting bitcoin, the price jumped.
Tesla is part of the Entrepreneur Index, which tracks 60 of the largest publicly traded companies managed by their founders or their founders’ families.
Other effects on the bitcoin price
While there’s no denying that Musk’s tweets impact cryptocurrency prices, other factors are also in play. Cointelegraph cited rising inflation concerns and weakening investor confidence as possible reasons for the drop. In fact, bitcoin wasn’t the only cryptocurrency to decline in price on Wednesday.
The cryptocurrency market in general corrected sharply on Wednesday after Ethereum co-founder Vitalik Buterin unloaded large quantities of Shiba Inu, Dogelon Mars and Akita Inu tokens and donated the proceeds from the sales to charity. As the meme tokens sold off, the bitcoin price started to fall.
However, Ethereum was largely unaffected by the correction and climbed back above $4,000 as users praised Buterin’s move. Traders also hope that the declining activity in meme tokens will reduce gas fees on the Ethereum network.
