Elon Musk suddenly turned back on bitcoin due to concerns about its power consumption, and said his electric car company Tesla will no longer accept cryptocurrency as a form of payment – but his decision will have- making 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 cryptocurrency, with many pointing out that the environmental damage caused by his heavy electricity consumption 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 over concerns over “the increasing use of fossil fuels for bitcoin mining and transactions, especially coal,” which has the worst emissions of all fuels. .
“Cryptocurrency is a good idea on many levels and we believe it has a bright future, but it can’t come at a cost to the environment,” he added.
Bitcoin is created or mined using a concept called proof of work, which involves solving functionally unnecessary and computationally difficult puzzles that consume a large amount of electricity. The currency’s annual electricity consumption is estimated at 148 terawatt hours and increasing, roughly the same amount as that of Poland. To make matters worse, some of this energy comes from coal-fired power plants.
Musk says Tesla won’t accept or sell bitcoin at this time, but plans to use up its reserves once mining “shifts to more sustainable energy.”
Carol Alexander of the University of Sussex, UK, claims that simply holding bitcoins, rather than transacting with them, has no carbon footprint, so Musk’s decision will have an effect on reducing Tesla’s future emissions.
Bitcoin isn’t the only cryptocurrency that Musk’s businesses are involved with. SpaceX, one of its other companies, has reportedly already accepted Dogecoin for satellite launches, although its reference to the currency as a “fuss” when it appeared on May 8 on Saturday Night Live lowered the price by $ 35. %. On May 11, Musk tweeted a poll asking his subscribers if Tesla should accept Dogecoin as a payment method. 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 the coins are less complex, with bitcoin requiring 707 kilowatt hours for each payment and Dogecoin requiring only 0.12, so a change could reduce the environmental impact of You’re here.
Alternatively, there are other cryptocurrencies that take different approaches to secure transactions, such as basing control of their blockchains on how many coins or how much hard drive space someone has, although Musk does made no public statement about it.
Regardless of what Musk’s next thoughts on cryptocurrency are, it’s clear that the billionaire’s tweets can have a substantial impact on the industry. Its anti-bitcoin stance caused an immediate 15% drop, but prices are rising again. Of course, considering the energy consumption per transaction, this market frenzy has its own environmental impact.