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Elon Musk causes Bitcoin crash

Tesla boss Elon Musk should have thought about that earlier. At the weekend he announced that he had sold or wanted to sell part of his Bitcoin holdings. The reason: cryptocurrencies are harmful to the environment. This then caused a lot of price movements in the market for cryptocurrencies.

Bitcoin in turmoil

The digital currency market recovered somewhat on Monday morning after Musk denied that Tesla had already made sales. At its low, the Bitcoin price fell by more than ten percent on Monday. A daily low of $ 42,185 was reached on the Bitstamp trading platform. That is the lowest level since February.

Other digital currencies such as Ether, XRP or Dogecoin also fell significantly. Ethereum, the second most important cyber currency after Bitcoin, even fell by more than 21 percent. Most recently, Bitcoin & Co. recovered somewhat, so that a Bitcoin cost 44,500 dollars. However, the price was still clearly in the red.

First fuel the hype, then the sudden retreat

In February, Tesla announced that it had invested $ 1.5 billion in Bitcoin, helping to fuel the Bitcoin rally in recent months. In addition, the company started accepting Bitcoin as a means of payment in March. Musk reversed this move last week.

The group made the decision because of the rapidly increasing consumption of fossil fuels for the transactions and production of Bitcoins, said Tesla boss Elon Musk on Wednesday (local time) on Twitter. Above all, the fact that a lot of coal energy is used for this is worrying. The Tesla boss later followed up with further criticism and described the Bitcoin energy consumption on Twitter as "insane".

According to Musk, Tesla no longer wants to trade Bitcoin as long as the energy balance has not improved significantly. In the most recent fiscal quarter, the company had sold bitcoins worth almost $ 300 million and, according to its own statements, earned around 100 million.

Despite the criticism, Elon Musk basically remains an advocate for the industry. "Cryptocurrency is a good idea on many levels and we believe in a bright future, but this cannot be at the expense of the environment," he said in his statement.

Bitcoin's energy consumption is immense

Environmentalists have long criticized Bitcoin because of the high power consumption that so-called mining - the production of currency units through energy-intensive computer processes - requires. It is also not clear why Musk is only now classifying the topic as problematic. Especially since Tesla's official company credo is: "Our mission is to accelerate the world's transition to sustainable energy".

With electric vehicles, Elon Musk has whirled up the car world and pushed the major carmakers' orientation towards electromobility

According to the Bitcoin Energy Consumption Index of the online platform Digiconomist, which advocates environmentally friendly crypto technologies among other things, Bitcoin currently uses about as much electrical energy as the Netherlands.

The carbon footprint of the digital currency roughly corresponds to that of Singapore. According to a study in the science magazine "Joule", the Bitcoin server farms produce 22 to 22.9 million tons of carbon dioxide annually. This roughly corresponds to the emissions in countries such as Jordan or Sri Lanka.

Bitcoin and crypto supporters such as Twitter boss Jack Dorsey argue that the environmental balance is likely to improve significantly in the long term with the increasing spread of renewable energies. However, many server farms that are used for Bitcoin mining on a large scale are located in countries with relatively low electricity costs such as China or Kazakhstan. Here, however, the energy often comes from sources that are comparatively harmful to the environment, such as coal.

Other companies could follow Tesla

Some observers expect that other companies could also follow Tesla's lead. Under US President Joe Biden, the environmental debate had come more into focus. "Tesla's proactive action could also have grown due to political pressure," commented analyst Timo Emden from Emden Research. "The company's exit is a major defeat for Bitcoin as a means of payment function."

As expected, the U-turn of the Tesla boss caused a lot of misunderstanding in the crypto scene. "Why now? Did Musk seriously know nothing about the environmental aspects before he bought Bitcoins for $ 1.5 billion?" Asked Nigel Green, head of the investment firm deVere Group. In fact, when the balance sheet was presented just two weeks ago, CFO Zach Kirkhorn emphasized Tesla's long-term interest in Bitcoin and announced that the company would continue to rely on the cryptocurrency.

The fourth largest digital currency, Dogecoin, appears to have remained in the favor of Elon Musk

Musk has caused a stir once before

It is not the first time Elon Musk's statements have put the stock market value of a crypto company in dire straits. Recently, when he appeared on the legendary US comedy show "Saturday Night Live", the price of Dogecoin, the fourth largest crypto currency in terms of market value, crashed.

Last week, on the other hand, Musk praised the efficiency of Dogecoin transactions on Twitter and described the digital currency as promising. It is unclear whether he meant energy consumption, user-friendliness or the potential as a means of payment, said Mark Humphery-Jenner, professor of finance at the University of New South Wales. The announcement by the US crypto exchange Coinbase that it would soon start trading Dogecoin ensured that the little-known crypto currency rose by almost 30 percent on Friday.

  • How does Bitcoin work?

    Pretty cryptic

    Bitcoin is a cryptocurrency. The means of payment therefore works digitally, without physical coins and notes, and is based on cryptographic processes. Bitcoin is organized on a decentralized basis and does not require banks or central banks. The currency can therefore be used worldwide and across borders under the same conditions and cannot be compared with any previous monetary system.

  • How does Bitcoin work?

    The "father" as a mystery

    In January 2009, open source software for Bitcoin was published under the developer pseudonym Satoshi Nakamoto. A few months earlier, this person or group had first publicly described how the digital currency works in a text.

  • How does Bitcoin work?

    How do you get bitcoins?

    There are different ways to get Bitcoins: You buy them on an internet platform (and pay for them with euros, for example). Or you accept Bitcoin as a means of payment for goods or services that you offer. Or you can become a "miner" and mine for bitcoins yourself.

  • How does Bitcoin work?

    Also digital: without a wallet, everything is nothing

    Cryptocurrencies are stored in a virtual wallet. It contains keys. Only with them can you find out who owns a Bitcoin. You also need them for transactions. A wallet can be saved on a smartphone, a computer, a USB stick, specially secured storage media and in a web cloud. Without a wallet, you have no access to your bitcoins.

  • How does Bitcoin work?

    Hats off to the Kypto currency

    Let's say Mr. X wants to buy a hat from Ms. Y and pay with Bitcoin. Both must have a public key (comparable to an account number) and a private key (comparable to a TAN) for a Bitcoin transaction.

  • How does Bitcoin work?

    Block building blocks

    Ms. Y sends her public key to Mr. X. He confirms with his private key and uses it to request a transaction. This is collected in a block with a few hundred other transactions (hence the term blockchain, but more on that later).

  • How does Bitcoin work?

    Arithmetic servants

    The block is distributed to all computers in the decentralized Bitcoin network. These computers are also called miners. They check the transactions going from one wallet to another and confirm them. In theory, everyone can let their computer work on the network. But now most of the work is done by professional server farms.

  • How does Bitcoin work?

    In the sweat of their graphics cards

    Before the transaction is actually carried out, the miners have to solve cryptographic computing tasks for each block. This requires computing power and strong graphics cards. Mining works like a competition: several miners try to decrypt a block from the blockchain at the same time. Whoever manages this first receives new - that is, "freshly mined" - Bitcoins as payment.

  • How does Bitcoin work?

    A kind of pearl necklace

    The block of Mr. X and Mrs. Y is part of a long chain, the so-called blockchain. All Bitcoin activities are stored in this decentralized database. The blockchain thus serves as the payment book (ledger) of the cryptocurrency: it contains all transactions and wallet information of the parties involved. Although all of this is recorded and visible, users remain anonymous.

  • How does Bitcoin work?

    Mining is done here

    China has by far the largest share in the computing power of the Bitcoin network (hashrate) and thus in its electricity consumption. Other important countries are the USA, Russia, Kazakhstan, Iran and Malaysia, according to the Bitcoin Electricity Consumption Index from the University of Cambridge. Mining is only worthwhile where electricity prices are cheap.

  • How does Bitcoin work?

    Huge hunger for energy

    The energy-intensive process for calculating the Bitcoin transactions (mining) requires around 120 terawatt hours (TWh) per year, according to the Bitcoin Electricity Consumption Index of the University of Cambridge. That is more electricity than any of the blue-colored countries consumes in a year. Graphics: Per Sander Texts: Gudrun Haupt

iw / hb (dpa, rtr, afp)