Tesla will “most likely” resume accepting bitcoin as a form of payment once the cryptocurrency’s mining rate reaches 50% renewables, CEO Elon Musk said at a virtual panel discussion on Wednesday. by the Crypto Council for Innovation, remarks consistent with statements he made on Twitter last month.
Tesla began accepting bitcoin as a payment method in February, the same time the company bought a historic $ 1.5 billion in bitcoin – before reversing its decision three months later, citing environmental concerns .
Cryptocurrencies have a bad reputation when it comes to energy consumption, as they indeed consume an enormous amount of energy, at least a lot of them. Bitcoin and Ethereum, the two largest currencies in space, use a mechanism called proof of work to power their networks and create new blocks of each currency. The “job” is to solve complex cryptographic problems and the miners do it by chaining high-end graphics cards to solve these problems. Large mining centers have thousands of GPUs running around the clock.
While Ethereum has already committed to moving from proof of work to something called proof of stake, which significantly reduces power consumption, Bitcoin seems less likely to make that transition. So, going “green” probably doesn’t mean making any major underlying changes to Bitcoin, but rather changing the energy sources that power these mining centers.
While Bitcoin’s global mining network clearly relies on renewables, it’s quite difficult to get exact information on the spread of renewable energy use given how, ah, the network is decentralized. What is clear is that it will take unprecedented transparency from the global network to even give Musk a starting point here to judge Bitcoin’s current or future “usability” and, in all likelihood, Musk will have plenty of leeway to make this decision based on anecdotal data whenever he wants.
Today’s comments come as no surprise: he tweeted in June: “When there is confirmation of reasonable (around 50%) use of clean energy by miners with a positive future trend, Tesla will start over. to authorize Bitcoin transactions. “
This is incorrect. Tesla only sold around 10% of the holdings to confirm that BTC could be liquidated easily without moving the market.
When there is confirmation of reasonable (around 50%) clean energy use by miners with a positive future trend, Tesla will resume allowing Bitcoin transactions.
– Elon Musk (@elonmusk) June 13, 2021
His comments give him a lot of leeway, however. “As long as there is a conscious effort to bring bitcoin miners to renewables, Tesla can support it,” he added later in the interview. Much of the bitcoin mining was done in China, where cheap coal and hydropower made it slightly more economical; but Musk noted that some of these coal-fired power plants have been closed (and that a large part of the miners in China have started to migrate abroad, in response to the mining crackdown by the Chinese side).
It’s also worth noting that his concerns about the environmental impact of bitcoin have sparked controversy within the bitcoin community, with some claiming that bitcoin is under oversized scrutiny for its energy consumption. real. Twitter CEO Jack Dorsey, who also participated in the virtual panel, actually argued that bitcoin can spur the transition to renewables. A white paper published by the Bitcoin Clean Energy Initiative, a program created by Square, argues that bitcoin mining could make renewable energy even cheaper and more profitable than it is today.
Musk’s comments, ambiguous as they are, show that he still wields considerable power in the cryptocurrency markets. The price of bitcoin fell below $ 30,000 on Monday, after hitting an all-time high of over $ 63,000 in April. But after the billionaire founder revealed more details about his holdings and those of his companies to the virtual panel, the price rebounded.
In addition to personal bitcoin holdings and Tesla’s bitcoin holdings, his aerospace company SpaceX also owns bitcoin. Musk added that he also personally owns Ether and (of course) Dogecoin. The price of all three cryptocurrencies rose after his comments.