Bitcoin dropped as much as 17% after Elon Musk tweeted Tesla Inc (TSLA.O) had stopped accepting the cryptocurrency to purchase its vehicles due to climate concerns.
At around the time on Thursday when Musk made the announcement, the value of the whole cryptocurrency market stood at around $2.43 trillion, according to data from Coinmarketcap.com.
Within two hours of the announcement the market capitalization had dropped to around $2.06 trillion, wiping off around $365.85 billion. The market has pared some losses. Since Musk’s tweet, the cryptocurrency market had seen $165.75 billion wiped off its value.
Ether , the world’s second-largest cryptocurrency, followed a similar pattern, also dropping 14% to touch a low of $3,550, before bouncing back to about $3,965.
The use of bitcoin to buy Tesla’s electric vehicles had highlighted a dichotomy between Musk’s reputation as an environmentalist and the use of his popularity and stature as one of the world’s richest people to back cryptocurrencies.
Some Tesla investors, along with environmentalists, have been increasingly critical about the way bitcoin is “mined” using vast amounts of electricity generated with fossil fuels.
Musk said on Wednesday he backed that concern, especially the use of “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,” he tweeted. Tesla shares fell 1.25% after hours.
Smaller cryptocurrencies were less affected by the news.
“Interestingly enough, altcoins are performing well. The reason given in the tweet is fossil fuel use for the mining of BTC, but most cryptocurrencies have already found more efficient ways to do that and therefore outperformed,” said Justin d’Anethan, sales manager at Hong Kong-based head of exchange sales at Diginex, a digital asset company.