Bitcoin plunges as much as 15% after Elon Musk halts Tesla payments, citing climate damage in major U-turn

Elon Musk has been a key driver of the cryptocurrency boom.

Bitcoin tumbled as much as 15% on Wednesday night after Elon Musk said his electric car company Tesla would stop accepting payments in the cryptocurrency because of concerns about its environmental impact.

The world’s most-traded cryptocurrency then pared some of its gains and was down 7.3% to $50,534 at 4.20 a.m. ET. Bitcoin remained around 72% higher for the year, but was 22% lower than a record high of close to $65,000 touched in April.

Musk’s announcement shocked the cryptocurrency world. The Tesla founder and chief executive has been one of the biggest advocates of cryptocurrencies, and has previously appeared to dismiss concerns about their energy use.

The revelation that Tesla had bought $1.5 billion of bitcoin and would start accepting payment in the token sent the price soaring 16% in a single day in February and added legitimacy to the asset class.

Yet Musk appeared to have had a change of heart, tweeting a statement on Wednesday night saying: “Tesla has suspended vehicle purchases using Bitcoin.

“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.”

Critics have long attacked bitcoin for its energy use. Bitcoin “mining” – the process of securing the network and creating coins using vast amounts of computing power – uses more energy each year than Sweden, according to Cambridge University researchers.

A Bank of America report estimated 73% of bitcoin mining takes place in China, where the majority of energy is generated by coal power.

Musk’s announcement sent other cryptocurrencies tumbling, too. Ether, the second-biggest coin by market size, was down 8.4% in the 24 hours to 4.10 a.m. ET. Dogecoin, XRP and Binance Coin all tumbled.

“For an asset whose price is driven mostly by psychological sentiment and momentum, bitcoin could have a hard time recovering from this and may never revisit [its] recent highs again,” Jesse Cohen, senior analyst at financial platform, said.

Read the original article on Business Insider