Tesla suspends bitcoin payments on fossil fuel concerns

Tesla has stopped allowing customers to use bitcoin to purchase its vehicles, citing the fossil fuel intensive nature of bitcoin mining.

The cryptocurrency, which is the largest in the world in terms of market capitalisation, fell 17 per cent in the aftermath of chief executive Elon Musk’s tweet.

The news comes after the car manufacturer purchased $1.5 billion worth of bitcoin in February, and it began allowing customers to make bitcoin payments in March.

New bitcoin is created when high performance computers compete against other computers to solve mathematical equations, which requires significant amounts of energy often derived from fossil fuels.

In 2019, bitcoin mining used about the same amount of energy annually as the Netherlands according to data from the University of Cambridge and the International Energy Agency.

Musk clarified that Tesla plans to hold rather than sell the bitcoin it already holds but will explore less energy intensive cryptocurrencies.

Tesla has recently expressed interest in incorporating other cryptocurrencies into its business model; SpaceX is set to launch a rocket entirely funded by cryptocurrency dogecoin next year.

Dogecoin is a digital asset that is best known for its logo and name, based on the image of a dog from the "Doge" meme.

“Tesla has suspended vehicle purchases using bitcoin,” said Musk. “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.”

“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. Tesla will not be selling any bitcoin and we intend to use it for transactions as soon as mining transitions to more sustainable energy.”

He added: “We are also looking at other cryptocurrencies that use less than 1 per cent of bitcoin’s energy.”

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