Bitcoin, it seemed, was finally ready for prime time. Prices were surging, big payments firms were accepting it, and billionaires such as Paul Tudor Jones and Stanley Druckenmiler were endorsing it as an investment.
But now that Tesla CEO Elon Musk is signaling that he’s suddenly wary of the cryptocurrency, what will that mean for the rest of Corporate America? The surprisingly negative comments from Musk about the massive amount of energy required to mine bitcoin (XBT) come after Tesla (TSLA) bought $1.5 billion of the cryptocurrency for its corporate balance sheet — and also after Musk has been busy hyping the value of the meme-driven crypto dogecoin. The price of bitcoin, dogecoin and other top cryptos ethereum, binance and litecoin, have been in freefall for the past week or so. Musk first tanked the market when he went on “Saturday Night Live” on May 8 and joked about cryptos, even calling dogecoin a “hustle.” But Musk’s recent declaration that Tesla would no longer accept bitcoin as payment for its cars due to the crypto’s massive carbon footprint, as well as a series of confusing and somewhat contradictory tweets about the company’s bitcoin holdings, has the investment world up in arms.
The comments come just as several prominent companies have started to embrace bitcoin. Square (SQ) and Venmo owner PayPal (PYPL) are working to streamline bitcoin payments on their networks. Big Data firm Palantir, Visa (V) and Starbucks (SBUX) are among the more well-known firms that have touted bitcoin lately as well. Palantir chief financial officer David Glazer said on an earnings call earlier this month that the company has discussed the possibility of adding bitcoin to its balance sheet and was “open for business'” with regards to accepting the crypto as payment from customers. “We still see other companies coming in and investing in bitcoin because they view it as a store of value, a digital gold,” said Stephen Kelso, head of markets at ITI Capital, in an interview with CNN Business. Kelso said bitcoin is still viewed by investors and corporations as a way to hedge against inflation. Along those lines, software firm MicroStrategy (MSTR), which like Tesla holds bitcoin on its balance sheet, has bought even more of the cryptocurrency in recent days. But MicroStrategy’s stock fell 7% on Monday and has plunged nearly 20% in the past week as bitcoin prices have tumbled.