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GUANGZHOU, China —
Tesla CEO Elon Musk tweeted that the electric vehicle manufacturer will cancel bitcoin car transactions, wiping out hundreds of billions of dollars from the cryptocurrency sector.
According to data from Coinmarketcap.com, the size of the entire cryptocurrency market was about $2.43 trillion at 6:06 a.m. Singapore time on Thursday, when Musk made the announcement.
Around 8:45 a.m., the market capitalization had fallen to $2.06 trillion, a loss of $365.85 billion. The stock market has recovered some of its losses. At 9:22 a.m. Singapore time, the cryptocurrency market had lost $165.75 billion in value since Musk’s message.
Tesla reported in February that it had purchased $1.5 billion in bitcoin and expected to accept the cryptocurrency as payment in a regulatory filing.
On Thursday, Musk cited environmental concerns and stated that Tesla is working to address them, “concerned about rapidly increasing use of fossil fuels for Bitcoin mining and transactions, especially coal, which has the worst emissions of any fuel.”
A single body, such as a central bank, does not issue Bitcoin. It is now maintained by a group of people known as “miners.” In order for bitcoin transactions to go through, these miners use custom-built computers that take a lot of energy to solve complex mathematical puzzles. Bitcoin’s energy demand exceeds that of certain countries.
According to CoinDesk numbers, bitcoin was down over 12% at 9:34 a.m. Singapore time, slipping below $50,000 for the first time since April 24. Despite the recent correction, bitcoin is still up over 400% in the last year.
Ether and XRP, two other cryptocurrencies, were also sharply lower.
Musk has been a strong supporter of digital currencies such as bitcoin and dogecoin in recent months, helping to push up their values.
Tesla’s CEO said that the company will not sell bitcoin and will instead use it for transactions “as soon as mining transitions to more sustainable energy sources.”
Bitcoin has gotten a lot of attention in the last year, thanks to announcements from companies like Square and Tesla, as well as major institutional investors entering the cryptocurrency market. Major investment banks such as Goldman Sachs and Morgan Stanley have also looked for ways to give their affluent clients access to bitcoin.