Tesla share price on watch as company changes Bitcoin policy
We examine the electric automaker’s recent policy change when it comes to purchasing its vehicles with bitcoin.
Not Environmentally Friendly
In late March, Elon Musk – CEO of electric automaker Tesla – made a bold declaration, tweeting:
‘You can now buy a Tesla with Bitcoin.’
That came after the automaker announced in February that it had made a $1.5 billion investment in the mainstay cryptocurrency, as a means to ‘further diversify and maximize returns’ of the cash held on the company’s balance sheet.
On May 13, Elon would reverse that radical decision, saying that the company would no longer allow customers to purchase Tesla vehicles with bitcoin. In a lengthy tweet, Musk would express concerns about the environmental impact of bitcoin mining, given its reliance on coal, saying:
‘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.'
Despite distributing many positive crypto-centric tweets in the last year, Musk stressed that innovative progress cannot be made at the expense of the environment.
'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.'
Moreover, despite describing cryptocurrency as a good idea, it should be noted that Tesla sold down its bitcoin position by $272 million during the first quarter, in a move that boosted the automaker’s bottom-line performance.
Looking forward however, Musk, in the same tweet set, said:
'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 <1% of Bitcoin's energy/ transaction.'
Tesla Share Price Drifts Lower
As with many tech stocks, Tesla (ticker: Tesla) has faced heavy selling pressure in the last month, with the stock down 22% in that period.
This comes as the market has honed in on inflation fears, with the Consumer Price Index (CPI) gaining 4.2% in April. This data release spooked investors on Wednesday, with the Nasdaq 100 plunging sharply in response.
Commenting on this, IG Market Analyst Kyle Rodda said:
‘The US Dollar ripped-face, as traders placed their bets on US economic exceptionalism. While stocks, naturally, plunged on the prospect of tighter policy and the more immediate impact of higher-risk free rates.’
With the automaker’s stock down in recent times, rising inflation fears, and the latest Bitcoin policy shakeup, the Tesla share price will likely be closely watched by investors when trade resumes on Thursday.
US futures were up – if just slighlty – at the time of writing, suggesting a positive open on Thursday.
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