Bitcoin drops below $40,000 for the first time in 14 weeks

Musk cited environmental issues for walking back on his decision to accept bitcoin as payment, as miners are increasing the use of fossil fuels for bitcoin mining. However, Musk added that he intends to resume transactions with bitcoin once energy issues involved in mining becomes more sustainable.

Bitcoin miners use high-powered computers to solve complex mathematical puzzles to enable transactions using bitcoin. According to Cambridge Bitcoin Electricity Consumption Index, cryptocurrency uses more energy than countries like Sweden and Malaysia do in a year.

The day Musk made these comments, more than $300 billion were wiped off the cryptocurrency market.

Musk's announcement came three months after Tesla made the announcement of having bought $1.5 billion and accepting payments in bitcoin.

Bitcoin was further hit by China banning financial institutions and payment companies from providing services related to cryptocurrency transactions. It also warned investors against speculative crypto trading.

Furthermore, Bitcoin's smaller rivals, also called altcoins, are eroding its share of the $2 trillion market. Altcoins, such as ether and dogecoin, are soaring even as bitcoin is battered and bruised.

As investors pile into rivals, Bitcoin's share of the crypto market has slumped to around 45 percent from 70 percent this year, according to Coin Metrics, while its trading volume share at major exchange Binance has halved to 23 percent, data provider CryptoCompare says. Its market cap remains around $800 billion.

Ether, on the contrary, is catching up. The coin has raised more than four-fold this year, to nearly $380 billion as more crypto platforms have started using its blockchain.

Dogecoin is following the suit, having soared 10,000 percent this year, becoming the fifth-biggest coin with a market cap of over $60 billion.

However, at the time of writing, both Ether and Dogecoin were trading in the red. Ether dropped nearly 13 percent to trade at $3,005 and Dogecoin dropped 15 percent to trade at $0.417.