Elon Musk’s bitcoin concerns sink crypto-linked stocks
Now Reading
Elon Musk’s bitcoin concerns sink crypto-linked stocks

Elon Musk’s bitcoin concerns sink crypto-linked stocks

Bitcoin plunged as much as 15 per cent, sinking to as low as $46,045, before trimming the decline

Avatar
Elon Musk

Stocks linked to cryptocurrencies fell in line with a slump in bitcoin, after Tesla CEO Elon Musk expressed concerns over its energy usage.

Bitcoin plunged as much as 15 per cent, sinking to as low as $46,045, before trimming the decline, after Musk said he was worried over the “rapidly increasing use of fossil fuels for bitcoin mining and transactions,” and suspended Tesla purchases with the asset, indicating he might favour other cryptocurrencies with much lower energy usage.

Coinbase Global, the operator of the largest US cryptocurrency exchange, fell 5.6 per cent in US premarket trading on low volume ahead of an earnings report due Thursday. Digital asset technology company Marathon Digital Holdings fell 13 per cent, as did peer Riot Blockchain. Microstrategy, which has put billions of dollars of its assets into bitcoin, plunged 9.2 per cent after market Wednesday, while Jack Dorsey’s Square also slipped.

In Asia, Monex Group, whose ownership of crypto exchange Coincheck had made it the second-best performing stock in Japan in 2021, dropped 11 per cent. Nexon, which just last month became the first Japanese firm to make a significant bet with a $100m purchase of the cryptocurrency, slumped 14 per cent, the most since August 2019, though a poor growth outlook given at its earnings also weighed on sentiment.

In Europe, crypto-miner Argo Blockchain slid 10 per cent, blockchain technology firm On-Line Blockchain lost 9.8 per cent and crypto infrastructure group Northern Data AG dropped 15 per cent.

Tesla drops

Tesla’s own shares fell 1.8 per cent in premarket trading, having already slumped about 30 per cent since the company announced in February that it had invested $1.5bn in bitcoin and signalled an intent to begin accepting the cryptocurrency as a form of payment. After last year’s huge rally, the stock has suffered from lofty trader expectations despite posting a record quarterly profit last month.

Musk said in his post that Tesla wouldn’t be selling any bitcoin and aimed to use it for transactions once mining shifted to a more sustainable energy. “We believe it has a promising future,” he wrote, “but this cannot come at great cost to the environment.”

That puts Musk at odds with ARK Investment Management’s Cathie Wood, who last month shared research that she said would “debunk the myth that bitcoin mining” is bad for the environment. Wood’s Ark Innovation ETF, which has been having a miserable month and has Coinbase as its ninth-largest holding, fell 1.3 per cent premarket.

Musk’s move is a step in the wrong direction for bitcoin bulls as well as for stock investors betting on the digital currency. Tesla’s disclosure in February added legitimacy to the cryptocurrency. It was the most visible catalyst during this year’s rally in the digital currency.

You might also like


© 2021 MOTIVATE MEDIA GROUP. ALL RIGHTS RESERVED.

Scroll To Top