Bitcoin price back below $50,000. What’s next for the cryptocurrency?

© Reuters

By Samuel Indyk

Investing.com – Bitcoin slipped back below $50,000 in the latter half of the morning as Elon Musk’s U-turn continues to pressure the cryptocurrency space.

Late on Wednesday night, the Tesla (NASDAQ:TSLA) CEO announced on Twitter that the electric vehicle company would no longer be accepting Bitcoin as payment for its vehicles, citing environmental concerns.

“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 on Twitter.

Musk also posted a chart of the Cambridge Bitcoin Electricity Consumption Index – created by the University of Cambridge – showing the increasing level of energy usage in recent months as the prices of Bitcoin and other major cryptocurrencies have jumped to record highs.

So, what’s next for Bitcoin?

This was a question posed by AJ Bell financial analyst Laith Khalaf.

“Environmental matters are an incredibly sensitive subject right now, and Tesla’s move might serve as a wake-up call to businesses and consumers using Bitcoin, who hadn’t hitherto considered its carbon footprint,” Khalaf said.

“Tesla’s decision certainly puts pressure on other big companies who accept Bitcoin to review their practices, because boardrooms will now be wary about getting it in the ear from ESG investors on the shareholder register.

“This highlights that the long-term adoption of cryptocurrencies by businesses, consumers and investors is still highly uncertain, as Tesla itself has pointed out.”

Companies in the cryptocurrency space have fallen in US pre-market trade with MicroStrategy (NASDAQ:MSTR) down around 10% and cryptocurrency exchange Coinbase (NASDAQ:COIN) down 5.3% at 11:40BST.

However, despite the latest move, Musk and Tesla have not completely closed the door on Bitcoin and other cryptocurrencies. In fact, Musk noted that Tesla would not be selling its current holdings, which amounts to approximately $1.3bln, and intends to use it for transactions once mining transitions to more sustainable energy.

Musk also stated that Tesla is looking at other cryptocurrencies that use less than 1% of Bitcoin’s energy/transaction.

Just on Tuesday, Musk posed a question on Twitter to his followers asking if Tesla should begin accepting Dogecoin. Whether the billionaire was serious or not remains to be seen.

Energy efficient mining

One interesting point to note amongst the noise is that the AIM-listed cryptocurrency miner Argo Blockchain (LON:ARB) today announced it has bought two data centres in Canada that are powered mostly on hydro power. The company said this was a key part its “green mining vision”.

At 11:40BST, Bitcoin was trading just above $49,000, down 13% over the last 24 hours. The second largest cryptocurrency by market cap, Ethereum, was around $3,700, down 12.2%. Elon Musk’s former favourite, Dogecoin, was trading around $0.40, down 18% in the last 24 hours.