Ether, the world's second-largest cryptocurrency, followed a similar pattern, also dropping 14% to touch a low of $3,550, before bouncing back to about $3,965.
"We are concerned about rapidly increasing use of fossil fuels for Bitcoin mining and transactions, especially coal, which has the worst emissions of any fuel," Musk wrote.
Tesla's announcements earlier this year that it had bought $1.5 billion of bitcoin and that it would accept it as payment for cars has been one factor behind the digital tokens' surging price this year.
As a result, Musk's comments roiled markets even though he said Tesla would not sell any bitcoin and would resume accepting bitcoin as soon as mining transitioned to more sustainable energy.
"The issue (of huge energy use by bitcoin miners) has been long known so it's nothing new. But taken together with Musk's recent comments about dogecoin, his latest comments seems to suggest his passion for cryptocurrencies may be waning," said Makoto Sakuma, researcher at NLI Research Institute in Tokyo.
A broader selling of risk assets in traditional markets was another factor in the plunge, said Jeffrey Wang, Vancouver-based head of Americas at Amber Group, a cryptocurrency service provider.
"I don't think everything is selling off just because of this news. This was kind of the straw that broke the camel's back in terms of adding to the risk sell-off," he said.
On Wednesday, the S&P 500 dropped 2.1%, and the Nasdaq Composite lost 2.7%. [.N]
Smaller cryptocurrencies were less affected by the news.
"Interestingly enough, altcoins are performing well. The reason given in the tweet is fossil fuel use for the mining of BTC, but most cryptocurrencies have already found more efficient ways to do that and therefore outperformed," said Justin d'Anethan, sales manager at Hong Kong-based head of exchange sales at Diginex, a digital asset company.
The bitcoin dominance index, a ratio of bitcoin's market cap to the total market cap of all cryptocurrencies dropped further to 42, its lowest level since June 2018.
A figure of 100 would indicate all cryptocurrency holdings were bitcoin.
(Reporting by Kevin Buckland in Tokyo and Alun John in Hong Kong; additional reporting by Hideyuki Sano in Tokyo; editing by Stephen Coates)
(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)
Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.
As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.
Support quality journalism and subscribe to Business Standard.