Elon's Eco Slam Sends Bitcoin Sliding

Tesla to no longer accept Bitcoin as payment…
Bitcoin’s impact on the environment…
Other crypto investors push back…

Table of Contents

1 One of Bitcoin’s biggest cheerleaders does an about-face, sending the value of the cryptocurrency plunging.
2 Environmental Impact of Bitcoin Mining
3 Future of Bitcoin and Other Cryptocurrencies at Tesla
4 One Platform. One System. Every Tool

One of Bitcoin’s biggest cheerleaders does an about-face, sending the value of the cryptocurrency plunging.

In a tweet on Wednesday, Tesla CEO Elon Musk announced the electric automaker would no longer accept Bitcoin as payment.

That decision comes just three months after Tesla revealed in a filing with the SEC that it had purchased $1.5 billion worth of Bitcoin and said it would begin accepting the cryptocurrency as payment.

Musk cited concerns about the “increasing use of fossil fuels for Bitcoin mining and transactions” as the reason for the reversal.

Bitcoin fell as much as 5% on the news and dropped below $50,000.

Environmental Impact of Bitcoin Mining

In a follow-up tweet, Musk said, “Energy usage trend over past few months is insane,” and shared a graph showing Bitcoin’s electricity consumption.

That data from the University of Cambridge estimates Bitcoin mining consumes more than 149 terawatt-hours of electricity per year which is more than the entire countries of Malaysia, Sweden, or Ukraine.

If Bitcoin’s electricity consumption were to be ranked among the nations across the world, the cryptocurrency would be number 26 on the list.

But how does a digital coin consume so much energy?

It’s all about the computers used to mine the blockchain and then verify transactions.

Each new Bitcoin is created or “mined” through a process of solving mathematical algorithms or puzzles on a computer.

Image: PHOTOCREO Michal Bednarek/Shutterstock.com

A report from Mint says, “The software that mines bitcoin is designed to take on average about 10 minutes for those on the network to solve the complex program and process a block. The process ends up using a massive chunk of electricity as giant and powerful systems are used by miners to mine blocks and verify transactions. The vast majority of Bitcoin’s energy consumption happens during the mining process. As a reward for their services, miners receive newly created bitcoins along with transaction processing fees.”

Musk raised issue with the increase of coal-powered electricity being used to mine Bitcoin and that may be because of where the majority of Bitcoin mining is done.

A study by Nature Communications found that as of April 2020 more than 75% of the world’s Bitcoin blockchain operations were in China.

Data from the energy and climate research group Ember shows 61% of China’s total electricity generation was coal-powered in 2020 and the country was the only G20 nation to see an increase in coal generation

Last year, China’s coal generation rose by 1.7% and the country was responsible for 53% of the total coal generation in the world.

Musk said coal has “the worst emissions of any fuel.”

But the billionaire doesn’t seem to be fully abandoning the top cryptocurrency just yet.

Editorial credit: Vectorfarmer / Shutterstock.com

Future of Bitcoin and Other Cryptocurrencies at Tesla

Musk concluded his statement by saying, “Tesla will not be selling any Bitcoin and we intend to use it for transactions as soon as mining transitions to more sustainable energy. We are also looking at other cryptocurrencies that use <1% of Bitcoin’s energy/transaction.”

So for now Tesla is holding its Bitcoin and looking for more sustainable digital coins.

Another big crypto investor, Dallas Mavericks owner Mark Cuban, pushed back against Musk’s position on Bitcoin’s environmental impact.

In a tweet, Cuban said, “We at Mavs.com will continue to accept BTC/Eth/Doge because we know that replacing Gold as a store of value will help the environment and shrinking big bank and coin usage will benefit society and the environment.”

Cuban cited this New York Times piece on the cost of gold and this MoneyWeek article to back up his claims.

Musk’s surprise announcement comes just days after he teased the possibility of Tesla accepting Dogecoin as payment in a Twitter poll following his guest-hosting stint on SNL over the weekend.

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