Bitcoin's value sunk by more than 10 percent following tweets from Telsa CEO and SpaceX founder Elon Musk - calling for the suspension of the cryptocurrency. Car manufacturer Tesla began accepting Bitcoin as payment for its electric cars less than two months ago.
Taking to Twitter Musk said on Wednesday: "Cryptocurrency is a good idea on many levels and we believe it has a promising future, but this cannot come at great cost to the environment."
He followed this up on Thursday, tweeting a graph of bitcoin's power consumption and saying: "Energy usage trend over past few months is insane."
The graph showed an increasing amount of energy Bitcoin miners are using to create the cryptocurrency.
In February Tesla said it had bought $1.5 billion (£1.07 billion) of bitcoin, the world's biggest digital currency, before announcing it would accept it as payment for its electric cars in March.
Read More: Tesla: Bitcoin price drops after Elon Musk announces no crypto payment
A recent study found bitcoin's carbon footprint is as large as one of China's 10 largest cities.
This is due to bitcoin miners using electricity produced with fossil fuels - mainly coal - for much of the year.
Miners do opt for renewable energy sources - like hydropower - however only during the wetter summer months.
The study was written by academics from the University of the Chinese Academy of Sciences, Tsinghua University, Cornell University and the University of Surrey.
It was published by the peer-reviewed journal Nature Communications.
The study warned: "Without appropriate interventions and feasible policies, the intensive bitcoin blockchain operation in China can quickly grow as a threat that could potentially undermine the emission reduction effort taken place in the country."
Tesla would retain its bitcoin holdings with the plan to use the cryptocurrency as soon as mining transitions to more sustainable energy sources, Musk said.
Ben Dear, CEO of Osmosis Investment Management, which holds Tesla stock in several portfolios said: "We were surprised it took Musk so long to recognise the detrimental impact of Bitcoin on the environment but are happy to see the reversal of Tesla's position."
He said the reversal will "put pressure on companies moving forward to think twice about the consequences before accepting it as a form of payment."
Dear added the volatility of bitcoin makes it commercially nonviable for large scale corporate adoption.
At the time of writing, bitcoin was down 11.82 percent in 24 hours, trading at $49,781.63 (£35,461.70) with a market cap of $931.33 billion (£663.43 billion).
The low over the past 24 hours was significant, with a drop to $47,720.77 (£33,993.65) at 1.14am BST on Thursday.
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