Gerry Palmers Tech 05.13.2021 02:May AM EDT

Elon Musk Cancels Bitcoin: Tesla Transaction Stoppage Leads to Value Drop

Elon Musk has canceled Bitcoin, and for a reason! As a result, Bitcoin prices have plummeted.

On Twitter, Musk said he has suspended Bitcoin transactions for his electronic vehicle-maker company Tesla, citing the cryptocurrency's "use of fossil fuels for Bitcoin mining."

Musk further said Tesla would not sell the cryptocurrency, stressing that the company will instead use their current stocks in transacting business.

Elon Musk Tweet Leads to 5 Percent Drop in Bitcoin Prices

Quite expectedly, given the influence of the Tesla CEO in the industry, Musk's announcement resulted in a steep 5 percent drop in Bitcoin's prices.

Before Musk tweeted, Bitcoin was valued at $54,174. Moments after he posted the tweet, it fell to $52,314, per CNBC.

A domino effect took down other cryptocurrencies as well, with Ethereum dipping 1.2 percent, Ripple sliding 6.26 percent, and Dogecoin slipping 9.48 percent.

Tesla shares likewise took a beating, falling 4.42 percent.

Bitcoin Value Surged After Tesla Purchase

After purchasing $1.5 billion in Bitcoin, Tesla had declared in an SEC filing in February their plan to invest $2 billion in the world's top cryptocurrency and other digital units as well, LADBible noted in a report. It said the company was accepting Bitcoin for its vehicle purchases. Tesla also disclosed a "positive impact" towards profitability of $101 million as a result of bitcoin sales profits.

This led to a surge in prices of cryptocurrencies, a trend seen in Bitcoin, Dogecoin and Ethereum. Bitcoin went past the $56,000 mark after the Tesla announcement.

Elon Musk's Environmental Concerns

Musk's about-face pronouncement was born out of the Tesla and SpaceX CEO's environmental concerns, saying using fossil fuels, such as coal, in Bitcoin mining and transactions was unacceptable.

He said that while he continues to believe that cryptocurrencies have a "promising future," this could not come "at a great cost to the environment."

Musk said Tesla does not intend to sell Bitcoin, unless its mining activities "transitions to more sustainable energy." He added they are looking at other cryptocurrencies that "use <1% of Bitcoin's energy/transaction."

Elon Musk Says Tesla to Hold, Not Sell Bitcoin

Even as he declared Tesla would not accept Bitcoin for vehicle purchases, Musk indicated that Tesla would hold and not sell Bitcoin it currently has.

Musk had openly showed his fondness for cryptocurrencies. In an episode of NBC's "Saturday Night Live" over the past weekend, Musk gave quite an entertaining introduction about cryptocurrencies to viewers and the show's cast as the guest host. However, when he was part of a sketch, Musk described the cryptocurrency Dogecoin as a "hustle," a remark that made the meme-inspired token stumble 30 percent, leading investors to try other units such as the growing Safemoon.

Bitcoin exposure has likewise been trending among Wall Street banks, leading many of its wealthy clients into the craze. Yet other experts and financial conservatives view the trend as a "bubble" waiting to burst.

It remains to be seen what will happen next to Bitcoing, but this latest move by Musk and Tesla is certainly a huge blow not only to the largetst cryptocurrency in the world, but in the whole industry as people turn their focus on its environmental impacts.