Thursday, 13 May 2021 09:02

Bitcoin set to fall in value after Tesla stops its use for purchases Featured

Bitcoin set to fall in value after Tesla stops its use for purchases Image by Gerd Altmann from Pixabay

The value of bitcoin is likely to fall in coming days after Tesla owner Elon Musk announced on Thursday that the electric car manufacturer would no longer use the digital currency in its transactions.

The digital currency fell from US$54,500 (A$70,497) to US$52,000 (A$67,265) soon after the announcement was made.

In a notice posted on Twitter, Musk said Tesla was halting the putchase of vehicles using bitcoin as he was concerned about the rise in the use of fossil fuels for bitcoin mining and transactions. He added that the use of coal, which had the worst emissions of any fuel, was of particular concern.

The cryptocurrency rose above US$50,000 (A$64,662) for the first time on 16 February this year, which meant a rise of nearly 70% in 2021 up to that point.

One of the main reasons for the rise was the purchase of US$1.5 billion worth of bitcoin by Musk on 8 February, causing the currency to rise in value to US$44,220.

In the notice, Musk said while cryptocurrency was a good idea, and Tesla believed it had a promising future, the environment could not be sacrificed.

"Tesla will not be selling any bitcoin and we intend to use it for transactions as soon as mining transitions to more sustainable energy," he wrote.

"We are also looking at other cryptocurrencies that use less than 1% of bitcoin's energy/transaction."

Reacting to the Tesla move, Adrian Przelozny, chief executive and co-founder of Australian cryptocurrency exchange Independent Reserve, said: "It is disappointing to see Tesla remove bitcoin as a payment option. Bitcoin is a revolutionary technology that can bring financial freedom to people all over the world in a way that would have recently been thought impossible.

"However, we've seen bitcoin receive all sorts of bad press throughout the years, such as governments banning its usage. And despite that, bitcoin has always recovered and grown to new highs.

"Long-term, I'm still very bullish on bitcoin and don't believe that this announcement will significantly impact price or adoption.

"That said, the cryptocurrency industry can always explore ways in which it can be more sustainable. In 2019 Independent Reserve announced its commitment to offsetting our carbon footprint. Through The Trillion Trees Foundation, we're planting hundreds of trees each year. Moreover, we're capturing a tonne of CO2 each year through our subscription with Climeworks.

"Lastly, it's important to note that the total energy used to secure the whole bitcoin network represents just 0.08% of the world's total energy output and just 0.2% of the world's total 'wasted' energy.

"That is energy which is produced and then not put to good use. In my view, that is a reasonable price to pay for the benefits that bitcoin can bring to the world."

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Sam Varghese

Sam Varghese has been writing for iTWire since 2006, a year after the site came into existence. For nearly a decade thereafter, he wrote mostly about free and open source software, based on his own use of this genre of software. Since May 2016, he has been writing across many areas of technology. He has been a journalist for nearly 40 years in India (Indian Express and Deccan Herald), the UAE (Khaleej Times) and Australia (Daily Commercial News (now defunct) and The Age). His personal blog is titled Irregular Expression.

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