Elon Musk Suspends Use of Bitcoin for Tesla Purchases

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According to company CEO Elon Musk, Tesla will reject bitcoin for car purchases due to environmental concerns.

A number of Tesla investors and environmentalists are skeptical about how Bitcoin will be “mined,” as it consumes huge amounts of electricity generated by fossil fuels, particularly coal.

Bitcoin fell more than 10% after Musk tweeted his decision on May, 12, less than two months after Tesla began accepting the world’s largest digital currency as a way of payment, and other cryptocurrencies lost some of their value before recovering later in Asian trading.

Tesla revealed in February that it had bought $1.5 billion worth of bitcoin and accepted bitcoin as a means of payment for its cars, sending the cryptocurrency soaring by 20%.

Musk added that the company will hold on to its bitcoin holdings and use them once mining transactions begin to use more sustainable energy sources.

Bitcoin is created when powerful computers compete with other machines to solve complex mathematical equations–a process that consumes intense energy.

Tesla is not thought to have sold many cars with Bitcoin as a means of payment, and Musk’s change of heart generated positive publicity while simplifying payment processes.

The dominance of Chinese bitcoin miners, who control 70% of the bitcoin mining ecosystem, and the lack of motivation to trade cheap fossil fuels for more expensive renewable energy sources may suggest that there are few quick fixes to the cryptocurrency’s emissions issue.

Chinese officials are reviewing data centers related to cryptocurrency mining to better understand the impact on energy consumption.

For more information, read the original story in Reuters.

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