Digital Assets: Musk To Bitcoin – It’s Not Me, It’s You
Tesla will no longer accept bitcoin in payment for cars.
Elon Musk has suddenly got religion on bitcoin. He announced in a tweet on Wednesday that Tesla (NASDAQ: TSLA) will not sell its cars for bitcoin due to the leading cryptocurrency’s carbon footprint and consequently adverse effect on the environment. (MarketWatch)
Predictably, the prices of both bitcoin and the Tesla stock took a dive on the news. Bitcoin fell from about $54,700 to below $48,000 at one point but has since recovered somewhat. As this is being written it is trading at $50,095. Tesla fell 1.3% in after-hours trading.
Musk on emissions
“Tesla has suspended vehicle purchases using bitcoin,” Musk posted on Twitter. “We are concerned about rapidly 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 great cost to the environment,” he continued.
However, in conciliatory remarks, Musk said “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 [less than 1 percent] of Bitcoin’s energy/transaction.”
The University of Cambridge on bitcoin’s energy consumption
In February, Tesla announced a $1.5 billion purchase of bitcoin. The news galvanized the price of the crypto into a fresh rally.
The University of Cambridge’s Centre for Alternative Finance, which tracks bitcoin’s energy consumption, said shortly afterward that bitcoin mining now consumed more electricity than Argentina, the United Arab Emirates or the Netherlands did for all of 2016.
Furthermore, a lot of that energy is sourced from fossil fuels. For example, about two-thirds of all bitcoins are mined in China, and a third of that is in Xinjiang, which has cheap coal power.
Rising bitcoin prices “incentivize” the use of polluting coal plants and inefficient and substandard bitcoin mining equipment.
It is possible that the emissions inherent in mining the bitcoin used to pay for a Tesla EV may outweigh the car’s environmental benefits.
Related Story: Dirty, Dirty Bitcoin
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