Tesla CEO Elon Musk said in a tweet on Wednesday that the firm would no longer accept Bitcoin as payment for its vehicles, citing reservations about Bitcoin mining’s energy use.
Bitcoin supporters were taken aback by the story.
Tesla CEO Elon Musk announced on Wednesday that the automaker will no longer allow Bitcoin for car sales due to its environmental effects, months after the company accepted the cryptocurrency.
Tesla & Bitcoin pic.twitter.com/YSswJmVZhP
— Elon Musk (@elonmusk) May 12, 2021
Bitcoin consumes a lot of electricity. The “coins” are generated by a method known as “mining,” which involves powerful computers solving complex math problems. That necessitates a massive amount of electricity.
Tesla’s Big Decision
Tesla shocked everyone when it announced three months ago that drivers would be able to pay for their electric cars with Bitcoin. Furthermore, the firm said at the time that it had spent $1.5 billion in cryptocurrencies. Tesla’s bitcoin reserves added significantly to its net income in its most recent quarterly report.
The decision by Tesla centers on Bitcoin’s usage of proof of work (PoW). Proof of work is a consensus mechanism used by Bitcoin to organize consensus across all machines running the Bitcoin blockchain program. Specialized machines compete to solve complicated cryptographic problems in order to protect the network.
The first individual to do so would receive a small sum of newly minted Bitcoin as a prize. Since pace is crucial, the “miners” with the most processing resources usually win. And that power consumes a significant amount of energy. According to a new Cambridge University survey, the annual electricity demand is higher than Argentina’s.
Musk, on the other hand, announced on Wednesday that Tesla would no longer market the cryptocurrency.
Despite Musk’s claims that Tesla is committed to combating climate change, the organization has been chastised from the outset for adopting a currency with a large carbon footprint.
Bitcoin supporters point out that mining can be driven by green resources. However, opponents point out that this should not negate the fact that there is an influence.
In certain ways, Bitcoin mining has held fossil fuel power stations operational while they would otherwise be idle, thus increasing the world’s carbon footprint.
The Rise in Bitcoin Over the Last 12 Months
Bitcoin’s price has more than quadrupled in the last year. It hit a new all-time high of about $42,000 at the start of 2021. Following initial Tesla news that the company added Bitcoin to its balance sheet, it soared to a new high of $60,000. According to optimistic observers, increased financial curiosity and the expectation that it is a gold-like safe-haven commodity have strengthened the digital currency.
Tesla has announced that it would begin taking bitcoin payments in return for its products, “subject to applicable laws and initially on a restricted basis.” Tesla will be the first global vehicle manufacturer to do so. However, with the recent reversal, Bitcoin’s future may remind in flux for the minds of some investors.