As you may already know, Tesla CEO Elon Musk announced on Twitter that the company “has suspended vehicle purchases using Bitcoin” over environmental concerns. This took many by surprise as although it’s true that Bitcoin negatively impacts the environment, Elon Musk is a well-known champion for Bitcoin and cryptocurrency in general.
At the time of this writing, Bitcoin has gone down around 10% going below $50,000 according to data from Coindesk.
Bitcoin’s energy consumption is nothing new and it’s something that has been well known for years now. According to data from the University of Cambridge and the International Energy Agency, bitcoin mining, as it stands currently, eats up more energy a year than the Netherlands and Argentina.
CEO of Osmosis Investment Management Ben Dear, a company that manages around $2.2 billion of Tesla’s assets, said “We are of course very concerned about the level of carbon dioxide emissions generated from bitcoin mining.”
Many institutions and governments have recently sounded the alarm over cryptocurrency’s effect on the environment; in fact, a senator from New York has proposed banning crypto mining in the state for three years because of this concern. But this concern is not shared by all as Edward Moya, senior market analyst at currency trading firm OANDA, said “Over the past couple of months, everyone disregarded news that Bitcoin uses more electricity than Argentina and Norway.”
Chinese miners dominate production as they make up around 70% of Bitcoin production according to data from the University of Cambridge, and coal-burning fuels most of that process.
Most Energy Friendly
With all this talk about wasting energy, it begs the question of what is, if any, the most environmentally friendly cryptocurrency? Research done by TRG Datacenters reveals that the most environmentally friendly cryptocurrency is XRP as it consumes 0.0079-kilowatt-hour (KWh) per transaction followed by Dogecoin at 0.12 KWh.
— RUN KUOTE (@runkuote) May 13, 2021
The worst cryptocurrencies in this regard are Ethereum at 62.56 KWh and Bitcoin at a staggering 707 KWh.
People on social media have been quick to respond to this decision as billionaire Mark Cuban, ever the ostentatious person, said the Dallas Mavericks will continue accepting Bitcoin because “we know that replacing Gold as a store of value will help the environment.” Tesla stock took a big hit as shares have gone down over 18% as of this writing.
We at https://t.co/VUydpLFzGh will continue to accept BTC/Eth/Doge because we know that replacing Gold as a store of value will help the environment https://t.co/bs7NvnJY8A and https://t.co/ELhbuLOBRV shrinking big bank and coin usage will benefit society and the environment https://t.co/zu08F0STEQ
— Mark Cuban (@mcuban) May 12, 2021
To go back to Musk’s quote, he says “cryptocurrency is a good idea… but this cannot come at great cost to the environment.” Chris Weston, head of research at the Australian financial services broker Pepperstone, said “Tesla has got an image of being environmentally friendly and bitcoin clearly is the opposite of that.
It’s currently unknown if Musk will do the same with SpaceX as he recently announced that the company will start accepting Dogecoin as a way to fund a lunar mission in 2022; although given that it’s more environmentally friendly, probably not.
As for my opinion, it’s a bold move from Elon Musk and from Tesla. He’s been such a huge proponent of cryptocurrency for better or for worse and that to see him acknowledge the technology’s shortcomings is ultimately a good thing.