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Tesla's BTC U-Turn Is 'Head Scratching': Wedbush Analyst

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Tesla's BTC U-Turn Is 'Head Scratching': Wedbush Analyst

In a new note, Dan Ives, managing director at equity research firm Wedbush Securities, describes Tesla’s “U turn” on BTC as a “shocker.”

Tesla CEO Elon Musk tweeted on Wednesday that Tesla will no longer accept BTC due to concerns over the cryptocurrency’s adverse impact on the environment. 

“Tesla has suspended vehicle purchases using BTC,” Musk said. “We are concerned about rapidly increasing use of fossil fuels for BTC mining and transactions, especially coal, which has the worst emissions of any fuel.” The Tesla CEO also added that Tesla will not be selling any more of its BTC, and the company intends to use it for transactions as soon as the network transitions to more sustainable energy. 

Crypto Leaders React to Elon Musk’s BTC Environment Bombshell

It was only three months ago (almost to the day) on Feb. 8 that Tesla announced it had invested $1.5 billion in BTC and would accept BTC as a form of payment for its products.

Now, Musk has “made a major U-turn on the crypto issue… in a head scratching move,” Ives write. “Musk is now concerned about the use of fossil fuels in BTC mining and transactions, yet the nature of BTC mining has not changed in the last three months, which speaks to why backtracking on the crypto transaction three months later is a very surprising and confusing move to both Tesla and crypto investors.”

Tesla’s reversal “will have a short-term negative impact on BTC and the crypto landscape as the market digests this confusing news from one of its biggest supporters,” Ives added.

Other crypto onlookers are equally as confused as Ives.

Neeraj Agrawal, communications director at the nonprofit Coin Center, told Decrypt he “can’t understand where Musk is coming from,” since Musk surely “knew about the energy use and the arguments that mining can be a useful force on the grid. We don’t know we don’t know what changed.”

BTC is ‘Friend and Foe’ for Tesla and Elon Musk: Wedbush

What does this U-turn mean for Tesla and BTC? 

Ives added that the change of tune on BTC doesn’t change the “thesis or growth trajectory for the electric vehicle story.” 

However, Ives added, it does add to the noise and volatility surrounding Tesla “at a time in which risk assets are under enormous selling pressure on the Street with Tesla leading the charge.”

In the last 24 hours, BTC has fallen by 11% from about $56,000 to as low as $47,000. Currently, the price is teetering on the $50,000 bracket. 

Tesla shares on the other hand ($TSLA), are on the up, albeit it by a small margin of 2% on the day to a price of approximately $602.

Source

All content in this article is for informational purposes only and in no way serves as investment advice. Investing in cryptocurrencies, commodities and stocks is very risky and can lead to capital losses.
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