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Saturday, October 23, 2021

Bitcoin price plunges after Elon Musk pulls support, citing environmental concerns

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The price of bitcoin plunged Wednesday after Tesla Inc. founder and Chief Executive Officer Elon Musk said the electric car maker will no longer accept the cryptocurrency as a payment option.

The backflip was two months in the making after Telsa announced it had invested $1.5 billion in bitcoin in February and that it would start accepting bitcoin as a payment option. The announcement, made by Musk (pictured) today on Twitter, cited environmental concerns for the decision to drop bitcoin support.

“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,” Musk wrote. “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.”

Musk noted that Tesla would not be selling its bitcoin holdings and that the company intends to use it for transactions as soon as mining transitions to more suitable energy. He also added that Telsa would be looking at other cryptocurrencies “that use <1% of Bitcoin’s energy/transaction.”

Musk didn’t detail any specific reason why he has made the decision now, but there has been significant media coverage of a power plant in New York that has been purchased to mine bitcoin.

The Greenridge Power Plant, a former coal-fired power plant in Torrey, New York, is currently in the process of expanding and switching to gas to power an extensive bitcoin mining operation. The company that owns the plant plans to have 18,000 dedicated bitcoin miners onsite by the end of the year with plans to add 10,500 more, according to Ars Technica.

The plans have also caught the attention of legislators. A bill in the New York state legislature seeks to place a three-year moratorium on all cryptocurrency mining in the state pending an environmental review.

After single-handedly causing a massive drop in the price of dogecoin after appearing on Saturday Night Live last week, Musk’s decision has had a similar albeit not as large effect on the price of bitcoin as well.

Bitcoin was down about 12% a little before 9 p.m. EDT, to $50,432, after trading as low as $47,720 earlier in the day. The cryptocurrency had traded in a band between $55,000 and $60,000 over the previous week.

Photo: JD Lassica/Wikimedia Commons

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