Elon Musk has backtracked on his previous efforts to accept BTC as a payment form. The Tesla founder cited environmental concerns over BTC mining. This indicates a possible lack of due diligence given his previous decision to support cryptocurrencies.
Bitcoin slumps to $42,000 and ETH watches its recent gains fade away
Bitcoin bottomed out at $42,000 on 17 May. It then rose to trade around the $44,000 level. The coin’s downfall points to an underlying weakness in the market.
Tesla's earlier announcement that the company would start accepting bitcoin as payment followed Musk’s $1.5bn purchase of BTC. Both moves were big drivers of crypto gains in the first quarter of 2021. Major corporations questioned their approach to the market, Many were worried at getting left behind by the move to digital currencies.
Musk’s recent comments on bitcoin are based on the belief that mining cryptocurrency depends on “dirty” fuel. The founder of the Uniswap decentralised exchange, Hayden Adams, ridiculed Musk's tweet, mentioning inconsistencies with Tesla battery production.
Adams said: “If we could make Tesla batteries last 10 times longer, with 10 times faster recharge times, at a fraction of the cost, wouldn't that be great? Yes, but this is incredibly hard to do, and it may take many years of research to get there.”
“Ideally, Tesla batteries last 10x longer, recharge 10x faster & drops costs 100x. Then it wins hands down,” he added.
Bitcoin and ether have a key week ahead. Can they bounce back and defend the recent drop in prices? The bull market is at risk. Musk’s recent comments could result in corporate flows drying up in the two largest cryptocurrencies.
Investment companies have started to divest from fossil fuels and will be reluctant to invest in crypto while there is some doubt over their mining energy sources.