Why is bitcoin crashing? What Elon Musk’s Tesla comments mean for the cryptocurrency

By Michael Grothaus

May 13, 2021

It’s another wild day in the world of cryptocurrency. And a bad one at that if you’re an investor in bitcoin. That’s because, as of the time of this writing, bitcoin’s price is crashing. Bitcoin is down a staggering 13% in the past 24 hours, dropping from around $57,000 per coin to around $49,600. So what’s driving the drop?

Elon Musk (of course).

(May 23, 2021), Musk tweeted that Tesla would suspend vehicle purchases using bitcoin as a payment option. However, unlike other of Musk’s comments about cryptocurrency, this was more than just an off-the-cuff remark. Musk gave a good reason for his decision to suspend bitcoin as a payment option for Tesla purchases: the environment.

“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,” Musk said. Those concerns are valid, as peer-reviewed studies have shown the energy (and thus environmental) cost of mining bitcoin can outweigh any economic benefits. Of course, this is Elon Musk and cryptocurrency and the future of digital tokens we are talking about, so naturally, the internet and stakeholders hunkered down on all sides after Musk’s comments.

Fellow billionaire Mark Cuban’s hot take was bitcoin is actually good for the environment because: gold.

Several bitcoin Twitter accounts accused Musk’s statement of being deceitful and self-serving.

Other people shot back that bitcoin will somehow save the planet.

Some big investors came out to announce they’re hitting the cable news shows to talk about how bitcoin is good for the environment (again).

Then there’s whatever this is:

But what does Musk’s decision (and all the pushback) mean for bitcoin going forwards? Look, no one knows, and if they say they do they are lying. Bitcoin has become much more “respectable” over the last few years but, relatively speaking, the entire cryptocurrency ecosystem is still nascent—and extremely volatile—and no one knows what bitcoin is going to do today, tomorrow, or next month.

If Musk’s tweet (and the helpful follow-up, above) accomplishes anything it is that it helps put a spotlight on the real-world impact bitcoin and other cryptocurrencies have on the environment, which is a conversation the world should be having—and bitcoin enthusiasts should want to have—if there’s any hope of the coin becoming a true instrument of economic value for everyday people in the future without destroying the planet.