After a year of gains and record highs, cryptocurrency markets are down today (19 May).
Leading cryptos Bitcoin and Ethereum have endured a turbulent time over the past week as share prices dropped by 28.66% and 32.13% respectively.
The market crash follows a decision by Tesla to no longer accept Bitcoin as payment for its vehicles, as announced by the car company’s CEO Elon Musk.
Musk’s shock post on Twitter had an immediate impact on Bitcoin’s value, which dropped $6 billion (£4.26b) and sent shockwaves through the crypto market.
And cryptos took another hit when China said it was going to block initial coin offerings, block exchanges and warned against speculative trading.
This is what’s going on in the world of cryptocurrencies…
China’s crackdown on cryptos comes days after Musk’s shock announcement.
Musk’s decision signifies a sharp u-turn for Tesla who only started accepting Bitcoin as payment for its services in February 2021.
It came after the electric car company bought $1.5b (£1.06b) of Bitcoin shares, which in turn sent the market price of both the crypto and Tesla soaring.
Yet the impact on the environment of Bitcoin mining – a complicated process of minting new digital tokens – has seen Tesla withdraw this option for customers.
The billionaire entrepreneur said: “We are concerned about rapidly increasing use of fossil fuel for Bitcoin mining and transactions, especially coal, which has the worst emissions of any fuel.”
Musk reaffirmed his belief that cryptocurrency has a “promising future” but that it “cannot come at great cost to the environment”, in his Twitter post.
Musk has been a long-time advocate of cryptocurrencies and the Tesla decision was felt across the market, with other digital tokens going down in price.