Elon Musk has given a sudden U-turn to bitcoin over concerns about its energy use, saying his electric car company Tesla will no longer accept cryptocurrency as payment, but his decision will have an impact and could Tesla turn to an alternative currency. . ?
Tesla bet big on bitcoin earlier this year with a $ 1.5 billion investment, and it paid off: Bloomberg estimates the company made $ 1 billion on its purchase in the first quarter of 2021.
At the time, Musk was criticized for investing in the cryptocurrency, with many people pointing out that the environmental damage caused by his heavy use of electricity was at odds with Tesla’s apparent green credentials.
Now, Musk appears to have come to the same conclusion, tweeting on May 12 that Tesla would suspend bitcoin sales due to concerns about “the increasing use of fossil fuels for bitcoin mining and transactions, especially coal, which has the worst emissions of any fuel. ” .
“Cryptocurrency is a good idea on many levels and we believe it has a promising future, but this cannot come at a great cost to the environment,” he added.
Bitcoins are created, or mined, using a concept called proof of work, which involves solving functionally useless and computationally difficult puzzles that consume a great deal of electricity. The currency’s annual electricity consumption is estimated to be 148 terawatt-hours and rising, or roughly the same amount as Poland’s. To make matters worse, some of this energy comes from coal-fired power plants.
Musk says Tesla will not accept or sell bitcoin for the time being, but plans to use its reserves once mining “transitions to more sustainable energy.”
Carol Alexander from the University of Sussex, UK, says that simply holding bitcoins, rather than transacting with them, has no carbon footprint, so Musk’s move will have an effect on reducing future emissions from Tesla.
Bitcoin is not the only cryptocurrency that Musk’s companies participate in. SpaceX, one of his other companies, is reportedly already accepting Dogecoin for satellite launches, although his reference to the coin as a “hustle and bustle” during his May 8 appearance on Saturday Night Live caused the price to drop by 35 percent. On May 11, Musk tweeted a poll asking his followers if Tesla should accept Dogecoin as payment. Tesla did not respond to New Scientist’s request for comment.
Dogecoin uses less energy per transaction than bitcoin because the calculations used to mine coins are less complex, as bitcoin requires 707 kilowatt hours for each payment and Dogecoin only requires 0.12, so a change could reduce Tesla’s environmental impact.
Alternatively, there are other cryptocurrencies that take different approaches to securing transactions, such as basing the control of their blockchains on the number of coins or the amount of hard drive space someone owns, although Musk has not made a public statement to the respect.
Wherever Musk’s thoughts on crypto go, it’s clear that the billionaire’s tweets can have a substantial impact on the sector. His anti-bitcoin stance triggered an immediate 15 percent drop, but prices are rising again. Of course, given the energy use per transaction, this market frenzy has its own environmental impact.