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

Bitcoin rallied after Tesla’s billionaire leader 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 really should have triggered a study by the US Securities and Exchange Commission.

Bitcoin, the world's major cryptocurrency, jumped a lot 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 % to $2,484.

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

“This [Ms Wierzycka’s comments] is inaccurate. Tesla only sold ~10 % of holdings to verify BTC could possibly be liquidated easily without moving market. When there’s confirmation of reasonable (~50 %) clean energy use 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 a lot more than 53 % 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 permit purchases of Tesla electric vehicles with Bitcoin, citing concerns over the energy required by the servers that underpin the cryptocurrency.

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

Magda Wierzycka, leader, Sygnia

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 nearly 120 terawatt-hours each year, a lot 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 must have made him the subject of investigation by the SEC if Bitcoin was a listed company.

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

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

On June 4, Mr Musk tweeted “#Bitcoin” with a broken heart emoji and a mention of a lyric from the popular song In the End by Linkin Park.

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