Tesla will suspend the use of Bitcoin for the purchase its electric vehicles. Founder Elon Musk cited environmental issues for this decision.
Following this move, the price of Bitcoin plunged by more than 11 percent, which is now trading at $50,000, down from $54,0000.
In a tweet, Elon Musk said Tesla would suspend the use of Bitcoin as this cryptocurrency was being mined through the use of a fossil fuel like coal, which has its own ramifications on the environment.
Elon Musk did not discount the use of any other cryptocurrencies — including Bitcoin — but noted that they will look at the environment assessment before taking any decision.
These digital currencies have their own regulations and are created when high powered computers compete against other machines to solve complex mathematical puzzles. This is a very energy intensive process that relies on electricity.
Tesla had first announced in February this year that it would start accepting bitcoin as a mode of payment for its electric vehicles. The company had then announced that it has already bought $1.5 billion worth of this cryptocurrency.
The electric vehicles maker in its filings with the Securities and Exchange Commission had said bitcoin would provide more flexibility to further diversify and maximise returns on its products.
The decision to accept bitcoins in exchange for its products is also subject to certain applicable laws and is very unlikely that it will happen anytime soon.
On the decision to purchase $1.5 billion, Tesla said it would acquire and hold digital assets from time to time or long term.
Elon Musk for long has been a very vocal supporter of cryptocurrency. In fact, his other company SpaceX announced that it will launch a satellite funded entirely by cryptocurrency Dogecoin to the Moon in the first quarter of next year.