Time to check in with the rational world of cryptocurrency pricing, where last week a coin designed as a joke made several Shiba Inu enthusiasts paper millionaires before an actual billionaire tanked the value by joking about it on live television.
That billionaire, Elon Musk, wreaked havoc again on Wednesday, in what will prove to be a far more consequential market decision than the drama above surrounding dogecoin and his appearance on SNL. Musk tweeted a statement announcing that his electric-motor company Tesla would no longer allow customers to pay for cars with bitcoin due to the crypto’s substantial environmental toll:
The announcement, in which Musk said Tesla would hold on to its bitcoin holdings, came just three months after he announced the firm invested $1.5 billion in the coin, causing its price to shoot up. Just after Musk’s tweet on Wednesday, the price of the digital asset tumbled almost $8,000. Shares of companies heavily invested in bitcoin also took a nosedive.
Though Musk has a history of tweeting to manipulate stock prices of his own electric-car company, the announcement came as a surprise. It’s been widely understood for at least four years that the energy needed to mine bitcoin constitutes an environmental crisis. (A recent Cambridge University analysis found that the cryptocurrency consumes more energy per year than Argentina, a nation of almost 45 million people.) How did Musk, one of the world’s most prominent backers of the coin — whose decision for Tesla to invest heavily caused the price to spike almost 20 percent in February — just now find out, or begin to care about, the carbon toll of the stuff?
Based on the plan that Tesla will hold on to its bitcoin until “mining transitions to more sustainable energy,” the move could be an attempt to harmonize his ideals of carbon-free futurism with the realities of his business, which requires more lithium — which involves an invasive mining process producing many pollutants — than the next four competitors combined. Just as Musk has tweeted to alter his own firm’s stock price, Wednesday’s announcement could be a chaotic stab at forcing bitcoin miners to consider renewable sources over cheap and dirty coal. Or it could just be more noise.