Artur Widak | NurPhoto | Getty images
GUANGZHOU, China – Hundreds of billions of dollars were wiped from the entire cryptocurrency market after Tesla CEO Elon Musk tweeted that electric vehicle maker would suspend bitcoin-based car purchases.
At around 6:06 a.m. on Thursday in Singapore, when Musk made the announcement, the value of the entire cryptocurrency market was about $ 2.43 trillion, according to data from Coinmarketcap.com.
By 8:45 AM, the market cap had fallen to about $ 2.06 trillion, which equated to about $ 365.85 billion. The market has offset some losses. Since Musk’s tweet, the $ 165.75 billion cryptocurrency market had wiped out its value by around 9:22 a.m. Singapore time.
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.
Citing environmental concerns on Thursday, Musk said Tesla is “concerned about the rapidly increasing use of fossil fuels for Bitcoin mining and transactions, especially coal, which has the worst emissions of any fuel.”
Bitcoin is not issued by a single entity such as 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 so that bitcoin transactions can go through. Bitcoin’s energy consumption is greater than in some individual countries.
At around 9:44 a.m. Singapore time, bitcoin fell more than 12%, falling below $ 50,000 for the first time since April 24, according to CoinDesk data. Despite the recent downturn, bitcoin is still up more than 400% in the past 12 months.
Other cryptocurrencies ether and XRP were also sharply lower.
Musk is a strong supporter of digital currencies, including bitcoin and dogecoin, and has helped drive their prices up in recent months.
Tesla’s CEO said the company will not sell bitcoin and plans to use it for transactions “as soon as mining moves to more renewable energy.”
Bitcoin has sparked interest in the past year as companies such as Square and Tesla announced bitcoin purchases and large institutional investors entered the cryptocurrency space. Major investment banks such as Goldman Sachs and Morgan Stanley have also looked for ways to give their high net worth clients exposure to bitcoin.