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Musk’s Bitcoin Concerns Sink Crypto-Linked Stocks

Stock MarketsMay 13, 2021 05:18AM ET
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© Bloomberg. Illuminated mining rigs operate inside racks at the CryptoUniverse cryptocurrency mining farm in Nadvoitsy, Russia, on Thursday, March 18, 2021. The rise of Bitcoin and other cryptocurrencies has prompted the greatest push yet among central banks to develop their own digital currencies. Photographer: Andrey Rudakov/Bloomberg

(Bloomberg) -- Stocks linked to cryptocurrencies fell in line with a slump in Bitcoin, after Tesla (NASDAQ:TSLA) Chief Executive Officer Elon Musk expressed concerns over its energy usage.

Bitcoin plunged as much as 15%, 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 favor other cryptocurrencies with much lower energy usage.

Coinbase Global Inc (NASDAQ:COIN), the operator of the largest U.S. cryptocurrency exchange, fell 5.6% in U.S. premarket trading on low volume ahead of an earnings report due Thursday. Digital asset technology company Marathon Digital Holdings Inc (NASDAQ:MARA) fell 13%, as did peer Riot Blockchain (NASDAQ:RIOT). Microstrategy (NASDAQ:MSTR), which has put billions of dollars of its assets into Bitcoin, plunged 9.2% after market Wednesday, while Jack Dorsey’s Square Inc (NYSE:SQ) also slipped.

In Asia, Monex Group Inc (T:8698), whose ownership of crypto exchange Coincheck Inc. had made it the second-best performing stock in Japan in 2021, dropped 11%. Nexon Co. (T:3659), which just last month became the first Japanese firm to make a significant bet with a $100 million purchase of the cryptocurrency, slumped 14%, the most since August 2019, though a poor growth outlook given at its earnings also weighed on sentiment.

In Europe, crypto-miner Argo Blockchain Plc (LON:ARB) slid 10%, blockchain technology firm On-Line Blockchain Plc lost 9.8% and crypto infrastructure group Northern Data AG (DE:NB2) dropped 15%.

Tesla Drops

Tesla’s own shares fell 1.8% in premarket trading, having already slumped about 30% since the company announced in February that it had invested $1.5 billion in Bitcoin and signaled 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 LLC’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 (NYSE:ARKK), which has been having a miserable month and has Coinbase as its ninth-largest holding, fell 1.3% 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. Bitcoin was down 7.6% to $50,356 at 10:09 a.m. U.K. time.

(Updates with latest share prices, context on Tesla.)

©2021 Bloomberg L.P.

Musk’s Bitcoin Concerns Sink Crypto-Linked Stocks

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Comments (2)
Bulent Ok
Bulent Ok May 13, 2021 9:20AM ET
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The only way to beat him at his own game.. Is to buy bitcoin raise the price so he can't get in at bottom prices... So he didn't know before his purchase that bitcoin was not environmentaly friendly?
Bulent Ok
Bulent Ok May 13, 2021 9:16AM ET
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The mannupulating smart rrrssee is at it again... Anything to tank the coin back to 28k region so he can hoard again.. Because he made millions from the in and out on his last purchase to balance his books... Watch the space... He will be doing everything in the book to tank bitcoin to the ground... One greedy manipulating capitalist... Musk, bezos, gates, Zuckerberg are the most crooked dangerous people playing in the capital field. They are the ones ruined it all for all.
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