Tesla stops accepting Bitcoin as it is not environment-friendly
Tesla CEO Elon Musk has been a vocal promoter of cryptocurrency and electric mobility. Late in March, Tesla announced that it would accept Bitcoin as payment for its cars. However, in a subsequent tweet this week, Musk backtracked and said that Tesla will no longer accept Bitcoin payments. He expressed concern that Bitcoin would lead to increased fossil fuel consumption. Confused? Let us explain.
Bitcoin is one of the world's most popular and valuable cryptocurrencies. Like all other cryptos, it is based on blockchain technology which ensures transactions are secure, irreversible, and immutably recorded across a distributed ledger system. However, Bitcoin is a finite currency, meaning a fixed number of tokens will ever be created, each being exponentially harder to create (mine) than the last.
Cryptocurrency is created by a process called mining. That entails performing complicated hash calculations in exchange for a token of the cryptocurrency. Crypto mining is partly why there's an acute shortage of graphic cards in the market today, simply because they perform calculations faster. However, crypto mining rigs consume a lot of electricity that is generated by burning fossil fuels such as coal.
Tesla said that it shall resume accepting Bitcoin once its mining process "transitions to more sustainable energy". The company also said that it is "looking at other cryptocurrencies that use less than one percent of Bitcoin's energy per transaction." Musk reportedly said that Tesla will not sell any more of the $1.5 billion-worth Bitcoin stash it purchased earlier this year.
Meanwhile, 18.5 million Bitcoin of the 21 million cap have already been mined, and the mining process now consumes as much electricity as the Netherlands each year. Given that the computational complexity would increase further, the electricity consumption is bound to increase proportionally.
Musk's statement said "crypto is a good idea on many levels" but "this cannot come at great cost to the environment". Crypto is essentially at odds with Tesla's mission to "accelerate the world's transition to sustainable energy". We're happy the billionaire showed mother nature some mercy but Tesla's abstinence from Bitcoin use won't stop miners, although Bitcoin's value fell four percent after this announcement.