Hundreds of billions of dollars were wiped off the entire cryptocurrency market after Tesla CEO Elon Musk tweeted that the electric vehicle maker would suspend car purchases using bitcoin.
At around 6 p.m. ET on Wednesday when Musk made the announcement, the value of the whole cryptocurrency market stood at around $2.43 trillion, according to data from Coinmarketcap.com. By 8:45 p.m., the market capitalization had dropped to around $2.06 trillion, wiping off around $365.85 billion.
The market has since pared some losses, and by around 3:00 p.m. on Thursday, the cryptocurrency market had seen around $290 billion wiped off its value since Musk’s tweet. Bitcoin was down 10.6% at around $48,500, according to Coin Metrics data, its first time below the $50,000 since Apr. 24.
Despite the recent pullback, bitcoin is still up over 400% in the last 12 months.
In February, Tesla announced in a regulatory filing that it had purchased $1.5 billion worth of bitcoin and planned to accept the cryptocurrency for payments.
Musk cited environmental concerns on Thursday and said Tesla is “concerned about rapidly increasing use of fossil fuels for Bitcoin mining and transactions, especially coal, which has the worst emissions of any fuel.”
Tesla & Bitcoin pic.twitter.com/YSswJmVZhP— Elon Musk (@elonmusk) May 12, 2021
Bitcoin is not issued by a single entity like a central bank. Instead, it is maintained by a network of so-called “miners.” These miners use purpose-built computers that require a lot of energy to solve complex mathematical puzzles in order for bitcoin transactions to go through. Bitcoin’s energy consumption is larger than some individual countries.
Other cryptocurrencies ether and XRP were also sharply lower.
Musk has been a big proponent of digital currencies including bitcoin and dogecoin, helping to drive their prices higher in recent months.
The Tesla CEO said the company will not be selling any bitcoin and intends to use it for transactions “as soon as mining transitions to more sustainable energy.”
Bitcoin has garnered interest in the last year as companies such as Square and Tesla announced bitcoin purchases and large institutional investors entered the cryptocurrency space. Major investment banks like Goldman Sachs and Morgan Stanley have also sought ways to allow their wealthy clients to get bitcoin exposure.