Tesla CEO Elon Musk declared that the company will stop accepting Bitcoin
Elon Musk shared in a tweet that Tesla’s clients won’t be able to pay with Bitcoin anymore because of fossil fuel use. Almost immediately after the news started circulating the internet, the cryptocurrency, which requires an energy-intensive process to exist, dropped in price by 17%.
Tesla has disabled people from paying with Bitcoin when buying the company’s electric cars, the CEO shared on May 13. As reasoning, he pointed out the issues surrounding the use of fossil fuel with the purpose of mining bitcoin.
Bitcoin is the number one digital currency worldwide, but it still took a 17% hit after the billionaire’s post. This is also the worst Bitcoin has done since the start of March. The cryptocurrency bounced back a little in Asian trading, however it was still down 12% at $50,933 on May 13 before the tweet.
Space X’s CEO stated that Tesla won’t be selling bitcoin and plans to use the cryptocurrency for transactions when mining switches to more sustainable solutions. “We are also looking at other cryptocurrencies that use <1% of bitcoin’s energy/transaction,” mentioned the tycoon.
Here is the tweet in question:
And here is the full post:
Back in March, Elon shared with the world that people can purchase Tesla’s cars with Bitcoin.
Most cryptocurrencies exist because high-powered computers compete against other machines to solve complex mathematical puzzles. And yes, that is indeed a very energy-intensive procedure and right now it requires electricity generated with fossil fuels and more specifically, coal.
If we keep mining the way we do, we should know that bitcoin ‘‘mining’’ takes up around the same amount of energy per year as the Netherlands did back in 2019. This is backed up by the most recent data from the University of Cambridge and the International Energy Agency.
Back in February, Tesla announced it purchased $1.5 billion worth of bitcoin, and then it started recognizing Bitcoin as a form of payment in March, which made the already popular currency’s price jump by 20%.
Now, with Tesla dropping Bitcoin, Edward Moya (a senior market analyst at currency trading firm OANDA) believes that Musk was getting ahead of investors focused on sustainability. He mentioned that ‘‘The environmental impact from mining bitcoins was one of the biggest risks for the entire crypto market. Over the past couple of months, everyone disregarded news that Bitcoin uses more electricity than Argentina and Norway.’’
Chris Weston, who’s head of research at broker Pepperstone in Melbourne, explained that even though the CEO sharing his opinion was the cause for the hit Bitcoin took, it also expressed Elon’s acknowledgment of this crypto’s carbon footprint. Weston also added that “Tesla has got an image of being environmentally friendly and Bitcoin clearly is the opposite of that.”.
Mr. Musk is definitely a fan of cryptocurrencies, but he also preaches and produces clean tech. “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,” shared the CEO.
The way Chinese bitcoin miners are taking over, combined with the absence of any motivation to exchange low-cost fossil fuels for high-priced renewables, could suggest that there might be a couple of quick-fix solutions to the emission issues.
By now, Chinese miners are the reason for around 70% of bitcoin production. This fact is confirmed by statistics from the University of Cambridge’s Centre for Alternative Finance. Chinese miners often opt for renewable energy, mainly hydropower, when the rainy summer times arrive and fossil fuels (mainly, coal) for the remaining months.
Blockchain analysis companies claim that, theoretically, it should be manageable to pinpoint the source of bitcoin, which increases the likelihood that a premium could be charged for green bitcoin. Solid climate change guidelines by governments worldwide could also aid the situation.
Some Bitcoin supporters, on the other hand, point out that the established financial system, consisting of the countless workers and computers in air-con offices, take up a lot of energy as well. Although this is the case, nevertheless, it should also be acknowledged that many companies are currently trying to move to a greener approach (especially with work from home because of the Coronavirus), so we should probably give them credit for that.
Musk has talked about other cryptos apart from Bitcoin. The billionaire is a Dogecoin supporter and has tweeted about the cryptocurrency so many times in the last couple of months that he managed to make the until-recently-unknown Dogecoin extremely popular.
Additionally, Space X’s CEO shared a tweet on May 10, which hinted that the space rocket company might start accepting the Doge-meme crypto as a form of payment to launch a lunar mission.
What do you think about Elon’s plans and opinions? Do you agree with him? We’re all bound to see what happens with our favorite space-obsessed engineer because we’re sure there are a few things he might be able to surprise us with.