Bitcoin rallies after Elon Musk says Tesla will accept cryptocurrency when miners use more clean energy

Sygnia chief executive accuses the billionaire of manipulating the digital asset's prices with his tweets

Elon Musk, chief executive of Tesla, said his company would resume accepting Bitcoins once its miners use clean energy. Photo: AFP

Bitcoin rallied after Tesla’s billionaire chief executive and founder Elon Musk said his electric car company will resume accepting the world’s biggest cryptocurrency once its miners user clean energy.

Mr Musk made the comments on Twitter in response to Magda Wierzycka, chief executive of South African financial services company Sygnia, who said his tweets on Bitcoin are tantamount to “market manipulation” and should have triggered an investigation by the US Securities and Exchange Commission.

Bitcoin, the world's largest cryptocurrency, jumped more than 12.4 per cent at 8:44am UAE time on Monday to trade at $39,319. Ethereum, the world's second-largest cryptocurrency, gained about 6.3 per cent to $2,484.

"What we have seen with Bitcoin is price manipulation by one very powerful and influential individual," Ms Wierzycka said in an interview with South Africa's Money Show radio programme.

“This [Ms Wierzycka’s comments] is inaccurate. Tesla only sold ~10 per cent of holdings to confirm BTC could be liquidated easily without moving market. When there’s confirmation of reasonable (~50 per cent) clean energy usage by miners with positive future trend, Tesla will resume allowing Bitcoin transactions,” Mr Musk said on Twitter.

In May, public criticism of the digital currency’s energy needs by Mr Musk and a Chinese regulatory crackdown caused the virtual currency’s price to plummet more than 53 per cent to $30,000 after reaching an all-time high of $64,899 in April.

Mr Musk has roiled Bitcoin and other digital tokens with a string of social media posts. Last month, the tycoon reversed a decision to allow purchases of Tesla electric vehicles with Bitcoin, citing concerns over the energy required by the servers that underpin the cryptocurrency.

What we have seen with Bitcoin is price manipulation by one very powerful and influential individual

Electricity is a primary input of Bitcoin and other cryptocurrencies. The coins are mined by computers that process complex algorithms in halls that span the area of several football pitches. In April, researchers at Cambridge University estimated that the electricity consumption of the Bitcoin network is almost 120 terawatt-hours per year, more than the energy consumption of the UAE at 119.45 terawatt-hours, and on course to overtake Pakistan.

Ms Wierzycka, the richest woman in South Africa, said Mr Musk’s recent social media activity on the price of Bitcoin should have made him the subject of investigation by the SEC if Bitcoin was a listed company.

“The [Bitcoin] volatility we have seen is an unexpected function of what I would call market manipulation by Elon Musk,” Ms Wierzycka said. “If that happens to a listed company, he would be investigated and severely sanctioned by [the] SEC.”

Mr Musk knowingly pumped up the price of Bitcoin by writing tweets including those mentioning Tesla’s $1.5 billion purchase of the cryptocurrency and then “sold a big part of his exposure at the peak”, she added.

On June 4, Mr Musk tweeted "#Bitcoin" with a broken heart emoji and a reference to a lyric from the popular song In the End by Linkin Park.

After suspending Bitcoin payments to Tesla, Mr Musk later said the company had not sold any of its holdings of the digital token.

"Bitcoin is on the move," said Naeem Aslam, chief market analyst at London-based AVA Trade. "The most important price level is of course the $50K for Bitcoin as only then we could see that Bitcoin is completely out of danger. But in the short term, we are focused on the $40K price level."