Bitcoin crisis: ‘There’s a problem brewing’ for crypto as its future plunged into doubtMay 14, 2021
Elon Musk announces suspension of Bitcoin Tesla purchases
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The world of crypto was thrown a curveball this week after Tesla CEO Mr Musk announced the company would stop accepting Bitcoin for car purchases — even though the company continues to hold the digital coin on its books. Mr Musk said: “Tesla has suspended vehicle purchases using Bitcoin. We are concerned about rapidly increasing use of fossil fuels for Bitcoin mining and transactions, especially coal, which has the worst emissions of any fuel. “Cryptocurrency is a good idea on many levels and we believe it has a promising future, but this cannot come at great cost to the environment.
“Tesla will not be selling any Bitcoin and we intend to use it for transactions as soon as mining transitions to more sustainable energy. We are also looking at other cryptocurrencies that use [less than] one percent of Bitcoin’s energy/transaction.”
His statement comes amid concerns over the impact on the environment the mining of cryptocurrencies has.
This was also a concern raised by Shark Tank investor and chairman of O’Shares ETF, Kevin O’Leary, who told Yahoo recently that he invests in Bitcoin.
He also warned, however, that “a problem is brewing” regarding both the environmental fears and also over human rights.
He said: “It is volatile there’s no question about it. There is a big problem brewing in this space, and I have mentioned this a couple of times.”
Mr O’Leary explained that he has allocated three percent of his portfolio to Bitcoin after Canada, and a handful of other countries, eased restrictions on institutional buying of the asset.
But, he also said: “Currently, 16 percent of coins mined come from China, where they don’t care about sustainability and they certainly have issues around human rights.
“And so there are many institutional clients who do not want to own so called ‘blood coin’ from China.
“As a result, we have a really interesting situation emerging –– the actual prominence of a coin over time, one that’s mined sustainably and in a jurisdiction that supports human rights… could be worth more a generic coin that can’t prove its prominence.”
Mr O’Leary later told CNBC he will buy “clean coin” not “blood coin”.
US President Joe Biden sparked a Bitcoin tumble last month when he announced plans to raise taxes on the wealthiest Americans to tackle inequality and finance trillions of dollars in higher social spending.
His Treasury spokesperson, Janet Yellen, also raised fears over the crypto currency’s impact on the environment.
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In February, Treasury Secretary Janet Yellen warned that the digital coin is “extremely inefficient” for making transactions and uses a “staggering” amount of power.
Britain’s Financial Conduct Authority (FCA) warned investors of the risks that come with Bitcoin following the recent slump.
They said: “If consumers invest, they should be prepared to lose all their money.
“Some investments advertising high returns from crypto assets may not be subject to regulation beyond anti-money laundering.
“Significant price volatility, combined with the difficulties valuing [Bitcoin] reliably, place consumers at a high risk of losses.”
Express.co.uk does not give financial advice. The journalists who worked on this article do not own Bitcoin.
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