Connect with us

Reuters

Musk decries bitcoin’s ‘insane’ energy use after Tesla payment U-turn

Tesla Inc (TSLA.O) boss Elon Musk denounced the “insane” amount of energy used to produce bitcoin on Thursday, doubling down on his sudden rejection of the cryptocurrency as a means of payment over environmental concerns.

Published

on

Representations of virtual currency Bitcoin are seen in front of Tesla logo in this illustration taken, February 9, 2021. REUTERS/Dado Ruvic

Tesla Inc (TSLA.O) boss Elon Musk denounced the “insane” amount of energy used to produce bitcoin on Thursday, doubling down on his sudden rejection of the cryptocurrency as a means of payment over environmental concerns.

Bitcoin fell more than 10% after Musk, one of its most famous backers, tweeted his decision to suspend its use, less than two months after Tesla began accepting it as payment for its electric cars. Other cryptocurrencies, including ethereum, also fell before regaining some ground in Asian trade.

“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,” Musk tweeted on Wednesday.

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.”

Tesla revealed in February it had bought $1.5 billion of bitcoin, the world’s biggest digital currency, before announcing it would accept it as payment for its electric cars in March. The company later said it had trimmed its position by 10% in the first quarter.

The announcements turbo-charged the crypto market, driving the price of bitcoin up by about 20%. Yet they highlighted an apparent contradiction with billionaire Musk’s reputation as a champion of low-carbon technology.

Some Tesla investors and environmental campaigners have been increasingly critical about the way bitcoin is created or “mined”; high-powered computers compete to solve complex mathematical puzzles in an energy-intensive process that often relies on fossil fuels, particularly coal.

GRAPHIC-Power-hungry bitcoin: https://tmsnrt.rs/3j4nUIV

Musk said he backed that concern, especially the use of “coal, which has the worst emissions of any fuel.”

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.

Some investors welcomed the U-turn.

“We were surprised it took Musk so long to recognize the detrimental impact of Bitcoin on the environment but are happy to see the reversal of Tesla’s position,” said Ben Dear, CEO of Osmosis Investment Management, which holds Tesla stock in several portfolios.

He said the reversal will “put pressure companies moving forward to think twice about the consequences before accepting it as a form of payment,” adding the volatility of bitcoin makes it commercially nonviable for large scale corporate adoption.

‘HASTY AND PRECIPITOUS’

Meltem Demirors, chief strategy officer at digital asset manager CoinShares Group, said Tesla was unlikely to have sold many, if any, cars using bitcoin and the back flip generated positive publicity while simplifying payment processes.

“Elon was getting a lot of questions and criticisms and this statement allows him to appease critics while still keeping bitcoin on his balance sheet,” Demirors said.

Mark Humphery-Jenner, an associate professor of finance at the University of New South Wales, said he was more concerned about Tesla management’s “very hasty and precipitous” decision-making.

Musk did not say in his Twitter comments whether any vehicles had been purchased with bitcoin and Tesla did not immediately respond to a request for comment.

Musk reiterated he remained a strong believer in cryptocurrencies.

“We are also looking at other cryptocurrencies that use <1% of bitcoin’s energy/transaction,” he tweeted on Wednesday.

Just a day earlier, Musk had polled Twitter users on whether Tesla should accept dogecoin, a currency he has helped turn from a joke into a valuable commodity.

He announced on Sunday that his commercial rocket company SpaceX would accept dogecoin as payment to launch a lunar mission next year – just hours after he sent the cryptocurrency spiraling downward when he called it a “a hustle” during a guest-host spot on the “Saturday Night Live” TV show.

The dominance of Chinese bitcoin miners and lack of motivation to swap cheap fossil fuels for more expensive renewables could mean there are few quick fixes to the cryptocurrency’s emissions problem.

Officials in Beijing are conducting a check on data centers involved in cryptocurrency mining to better understand their impact on energy consumption, sources told Reuters last month.

Our Standards: The Thomson Reuters Trust Principles.

“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,” Musk tweeted on Wednesday.

Source: https://www.reuters.com/technology/musk-decries-bitcoins-insane-energy-use-after-tesla-payment-u-turn-2021-05-13/

Reuters

Evergrande EV unit shares jump after chairman signals business shift

Shares in China Evergrande Group’s electric vehicles (EV) unit <0708.HK> rose on Monday as the embattled property developer moved to prioritise the growth of its nascent EV business over its troubled core real estate operations.

Published

on

A traffic light is seen near the headquarters of China Evergrande Group in Shenzhen, Guangdong province, China September 26, 2021. REUTERS/Aly Song/File Photo

HONG KONG, Oct 25 (Reuters) – Shares in China Evergrande Group’s electric vehicles (EV) unit <0708.HK> rose on Monday as the embattled property developer moved to prioritise the growth of its nascent EV business over its troubled core real estate operations.

Evergrande (3333.HK) , reeling under more than $300 billion in liabilities, averted a costly default last week with a last-minute bond coupon payment, buying it more time to head off a looming debt crunch with its next major payment deadline on Friday. read more

An announcement by its chairman, Hui Ka Yan, reported by state media on Friday, that it would make its new electric vehicle venture its primary business, instead of property, within 10 years, cheered investors on Monday.

Evergrande rose as much as 6% during the session before closing down 0.7%. China Evergrande New Energy Vehicle Group Ltd (0708.HK)rose 11.4%. The benchmark Heng Seng Index (.HSI) was flat.

Raymond Cheng, CGS-CIMB Securities’ head of China research, said the business shift makes sense given Beijing’s growing support for EVs and its increased tightening of the frothy real estate sector.

“This is the best outcome, if it just focuses on existing developments and maintains the operation,” Cheng said.

While the move would help Evergrande deleverage by gradually scaling down its massive undeveloped land holdings, Cheng said it was unclear how it would affect the company’s planned disposals including stakes in the EV unit.

Evergrande’s new vehicle business, founded in 2019, has yet to reveal a production model or sell a single vehicle. Last month, the unit warned it was still seeking new investors and asset sales, and that without either it might struggle to pay salaries and cover other expenses.

Hui expects property sales will slow to about 200 billion yuan ($31.31 billion) per year within the 10-year period, compared to more than 700 billion yuan last year, China’s Securities Times reported on Friday.

NEXT HURDLES

News late last week that Evergrande had averted a default by securing $83.5 million for the last-minute payment of interest on a bond has lifted confidence the company may be able to avoid a messy collapse that would have significant ramifications for global financial markets.

On Monday, sources told Reuters some bondholders had received coupon payments they were owed last week, which suggested debt problems were being addressed.

Evergrande next needs to find $47.5 million by Friday and has nearly $338 million in other offshore coupon payments coming up in November and December.

Broader concerns about China’s real estate sector, which accounts for a quarter of gross domestic product, still loom large for investors and policymakers in the world’s second-largest economy.

Developer Modern Land (1107.HK) has a $250 million bond maturing on Monday. It said last week it ended an attempt to seek bondholder approval to extend the maturity date of the notes by three months, citing liquidity issues.

Calls to Modern Land’s investor relations office were not answered when Reuters sought comment on whether the payment has been made.

As liquidity concerns in the sector grow, property firms with large dollar-denominated debts will meet with the National Development and Reform Commission in Beijing on Tuesday to report their total issuance volume and repayment capability, a source with direct knowledge of the matter said.

Media outlet Cailianshe first reported the meeting earlier on Monday.

Separately, Evergrande said on Sunday work had resumed on more than 10 projects in six cities including Shenzhen. Many of its projects had been halted due to payments owed to suppliers and contractors. read more

Also lifting general confidence, state media outlet Xinhua in an article on Monday said the spillover effect of Chinese real estate companies’ debt default risks to the financial industry would be controllable. read more

The report follows comments from senior officials including Vice Premier Liu He and central bank governor Yi Gang last week, who also said property companies were facing debt default issues because of poor management and a failure to adjust to market changes. read more

Reporting by Clare Jim and Donny Kwok in Hong Kong, Andrew Galbraith in Shanghai, Jing Xu in Beijing; editing by Richard, Pullin, Sam Holmes and Christian Schmollinger

Our Standards: The Thomson Reuters Trust Principles.

read more

Source: https://www.reuters.com/business/evergrande-ev-unit-shares-set-jump-after-chairman-signals-business-shift-2021-10-25/

Continue Reading

Reuters

China faces challenges from ‘mismanagement’ at certain firms, says PBOC head

China’s economy is “doing well”, but faces challenges such as default risks for certain firms due to “mismanagement”, the People’s Bank of China Governor Yi Gang said on Sunday.

Published

on

Governor of People’s Bank of China (PBOC) Yi Gang attends a news conference on China’s economic development ahead of the 70th anniversary of its founding, in Beijing, China September 24, 2019. REUTERS/Florence Lo/File Photo

  • China will be vigilant to avoid systematic risk – Yi Gang
  • Beijing will prioritise protection of consumers, home-buyers
  • China’s recovery trajectory remains unchanged – Yi Gang
  • PBOC will focus on retail, domestic use of digital yuan

Oct 17 (Reuters) – China’s economy is “doing well”, but faces challenges such as default risks for certain firms due to “mismanagement”, the People’s Bank of China Governor Yi Gang said on Sunday.

Concerns have grown in recent weeks over the possible collapse of property developer China Evergrande Group (3333.HK), which has more than $300 billion in liabilities and has missed three rounds of interest payments on its dollar bonds.

As the company wrestles with its debt, worries about a possible spillover of credit risk from China’s property sector into the broader economy have intensified. read more

Yi Gang said default risks for some firms and operational difficulties of small and mid-sized banks are among the challenges for China’s economy, and that authorities are keeping a close eye “so they do not become systematic risks”.

While growth has moderated due to a sporadic rise in coronavirus infections, China’s economy is expected to grow 8% this year, Yi said at an online meeting of the Group of 30 International Banking Seminar, which coincides with the annual meetings of the International Monetary Fund and World Bank.

Authorities will first try to prevent problems at Evergrande from spreading to other real estate companies to avoid a broader systematic risk, he added.

The rumbling crisis at Evergrande and other major homebuilders drove debt market risk premiums on weaker Chinese firms to a record high last week and triggered a fresh round of credit rating downgrades. read more

“The interest of creditors and shareholders will be fully respected strictly in accordance to law,” Yi said. “The law has clearly indicated the seniority of liabilities.”

Authorities will give the highest priority to the protection of consumers and home buyers, while respecting the rights of creditors and shareholders, he said.

The PBOC was taking various steps to fend off financial risks, such as replenishing capital for small and midsize banks, Yi Gang said.

The world’s second-largest economy has staged an impressive rebound from the pandemic but there are signs the recovery is losing steam.

“Economic growth has been slowed down a little bit, but the trajectory of economic recovery remains unchanged,” he said.

On the development of digital yuan, Yi Gang said the PBOC will focus on its domestic and retail use as cross-border and international usage was “a little bit complicated” due to requirements over issues such as money laundering.

“We will closely cooperate with the central bank community,” he said, adding that using digital yuan as a tool to promote China’s Belt and Road initiative was “not our priority at this point”.

Reporting by Leika Kihara in Tokyo; Editing by Jan Harvey

Our Standards: The Thomson Reuters Trust Principles.

Source: https://www.reuters.com/world/china/china-faces-challenges-mismanagement-certain-firms-says-pboc-head-2021-10-17/

Continue Reading

Reuters

Lenovo stock drops 17% after withdrawing Shanghai listing application

Lenovo Group Ltd saw its stock fall more than 17% on Monday, its biggest intraday decline in over a decade, after the Chinese technology giant withdrew its application for a 10 billion yuan ($1.55 billion) share listing in Shanghai.

Published

on

An employee gestures next to a Lenovo logo at Lenovo Tech World in Beijing, China November 15, 2019. REUTERS/Jason Lee

SHANGHAI, Oct 11 (Reuters) – Lenovo Group Ltd (0992.HK) saw its stock fall more than 17% on Monday, its biggest intraday decline in over a decade, after the Chinese technology giant withdrew its application for a 10 billion yuan ($1.55 billion) share listing in Shanghai.

The world’s biggest personal computer maker on Friday said it would withdraw its application, days after it had been accepted by Shanghai’s STAR Market. read more

On Sunday, Lenovo said it had done so because of the possibility of the validity of financial information in its prospectus lapsing during the application’s vetting. It did not detail reasons why the information may no longer be valid.

It also cited “relevant capital market conditions such as the latest circumstances in connection with the listing.”

“The group’s business operations are in good condition as usual. The withdrawal of the application is not expected to give rise to any adverse impact on the financial positions of the group,” Hong Kong-listed Lenovo said in the Sunday statement.

($1 = 6.4368 Chinese yuan renminbi)

Reporting by Brenda Goh and Jason Xue; Editing by Christopher Cushing

Our Standards: The Thomson Reuters Trust Principles.

On Sunday, Lenovo said it had done so because of the possibility of the validity of financial information in its prospectus lapsing during the application’s vetting. It did not detail reasons why the information may no longer be valid.

Source: https://www.reuters.com/technology/lenovo-stock-drops-17-after-withdrawing-shanghai-listing-application-2021-10-11/

Continue Reading

Trending