Bitcoin jumps after Elon Musk says Tesla will resume its use when mining cleaner

Mr Musk, Tesla's chief executive, has whipsawed Bitcoin and other digital tokens in the past few months.
Mr Musk, Tesla's chief executive, has whipsawed Bitcoin and other digital tokens in the past few months.PHOTO: REUTERS

NEW YORK (BLOOMBERG, REUTERS) - Bitcoin jumped above US$39,000 after billionaire Elon Musk said Tesla would resume transactions with the cryptocurrency when mining is done with more clean energy.

The electric car maker will allow Bitcoin transactions again "when there's confirmation of reasonable (~50 per cent) clean energy usage by miners with positive future trend", Mr Musk, Tesla's chief executive, said in a tweet.

His posting was in reply to a report in Cointelegraph, which cited Ms Magda Wierzycka, executive chair of South African asset manager Sygnia, as saying that Mr Musk's recent tweets on Bitcoin should have prompted an investigation by the United States Securities and Exchange Commission.

The cryptocurrency gained as much as 9.3 per cent to US$39,372 on Sunday afternoon in New York, the highest level since June 3 and just below the US$40,000 round-number level seen as key by some chart watchers. It climbed a bit further in Asia to hit US$39,838.92 on Monday (June 14).

"The tweet added to positive momentum as Elon's stance seems to be moderating and providing a target that's not far away," said Mr Jonathan Cheesman, head of over-the-counter and institutional sales at crypto derivatives exchange FTX. "The rally was already under way as the market speculates about an imminent purchase from MicroStrategy and the G-7 comments on crypto were neutral, even optimistic, about digital innovation."

Software company MicroStrategy, whose CEO Michael Saylor has become a vocal Bitcoin evangelist, last week boosted a junk-bond offering for the purposes of buying the cryptocurrency to US$500 million (S$663 million) from US$400 million.

Mr Musk has whipsawed Bitcoin and other digital tokens in the past few months. In February, Tesla announced it had bought US$1.5 billion in Bitcoin and signalled its intent to start accepting Bitcoin as payment for vehicles. In March, Mr Musk tweeted, "you can now buy a Tesla with Bitcoin", only to say last month that the practice was suspended due to concerns about fossil fuel usage for Bitcoin mining and transactions.

The U-turn has been controversial, as Ms Wierzycka's reported comments indicate, partially because the moves by Tesla and Mr Musk have had noticeable effects on Bitcoin's price. While there are other issues out there, ranging from institutional adoption and diversification on the positive side to sustainability and regulatory concerns on the negative, a tweet by Mr Musk can often change momentum and can dominate the narrative for days or weeks.

Bitcoin is up about 33 per cent this year but has collapsed from a record peak above US$60,000 amid a regulatory crackdown in China and Mr Musk’s apparently wavering enthusiasm for it. Telsa stock is down about 30 per cent since the company’s Bitcoin purchase