Elon Musk Flips On Bitcoin

Tesla's decision to no longer accept Bitcoin due to environmental impact concerns led to a tumble in the cryptocurrency's value.

Tesla CEO Elon Musk is being blamed for setting off one of the wildest cryptocurrency crashes of the past two years, a swoon that knocked nearly $1 trillion off crypto’s market capitalization in mid-May.

Musk had been a big supporter of Bitcoin (BTC), the leading crypto. So when he tweeted in May that Tesla would no longer accept Bitcoin as payment for its electric vehicles—citing concerns about the energy consumption of Bitcoin’s mining process—Bitcoin’s market price plunged and remained down 40% for subsequent weeks.

Perhaps more significantly, for the first time, more-traditional equity markets experienced some crypto fallout. Other reasons cited for the crash include the exit from the market by “newbie” retail investors not used to cryptocurrency’s volatility, heightened leveraged trades across Asia, and the US Federal Reserve’s tightening its monetary policy. Regardless, stocks overall slumped for three consecutive days.

Cryptos, however, are still drawing converts. The tumble came as banking giant Wells Fargo announced that it would begin offering crypto services to qualified investors starting in mid-June, even as the bank’s chief investment officer for wealth and investment management and president of Wells Fargo Investment Institute acknowledged in a May 19 Business Insider interview that “plenty of risks” remain to investing in crypto. Even public companies have begun adding cryptocurrencies to their corporate treasuries to hedge against inflation.

As for Musk’s apparent change of mind: The CEO suggested that he had previously been uninformed about the extent of Bitcoin’s energy profligacy—Bitcoin mining uses nearly as much electricity as the whole of Argentina over the course of a year, according to the University of Cambridge Bitcoin Electricity Consumption Index, which the university updates daily.

Nevertheless, die-hard Bitcoin investors have circulated a Change.org petition demanding that he sell his remaining Bitcoins.