Musk's u-turn on payments shocks bitcoin

Business | Winnie Lee and agencies 14 May 2021

Bitcoin plunged as much as 19 percent yesterday from its 24-hour peak after Elon Musk tweeted Tesla had stopped accepting bitcoin to purchase its vehicles due to climate concerns.

Musk said Tesla is concerned about rapidly increasing use of fossil fuels for Bitcoin mining and transactions, especially coal, which has the worst emissions of any fuel. He added Tesla will not be selling any bitcoin and the group intends to use it for transactions as soon as mining transitions to more sustainable energy.

Musk's decision sent bitcoin to a 24-hour low of US$46,294 (HK$361,099) in three hours after he tweeted. As of 7.30pm, bitcoin was 12 percent down US$49,163.22. Ethereum fell 13.25 percent to US$3,707.31, litecoin fell 16.8 percent to US$312.37, and dogecoin fell 20.66 percent to US$0.3933.

Musk has been a big proponent of bitcoin and dogecoin, and announced in March that bitcoin could be used as payment in Tesla. However, SoftBank founder Masayoshi Son isn't sure about bitcoin. "There's a lot of discussion over if it's a good thing or a bad thing, what's the true value or is it in a bubble, honestly speaking, I don't know," Son said.

Prominent investor and the founder of Pershing Square Capital Bill Ackman said he "kicks himself for not understanding" crypto like bitcoin, but says it has "no intrinsic value."

Meanwhile, in Hong Kong, the Hang Seng Index fell 512 points to close at 27,718.67, dragged down by new economy shares and on worries over US inflation. The Hang Seng Tech Index fell 3.33 percent to 7,599.62 points. Asset manager EFG maintained its forecast towards the Hang Seng Index with 30,700 points this year.

Global stocks fell toward a six-week low and US equity futures retreated amid inflation fears.

The MSCI World Index sank for a fourth day, losing 0.6 percent in the longest sell-off since September. S&P 500 contracts dipped 0.4 percent, while Asian and European equities saw steeper losses.

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