Seven weeks. That’s the short amount of time in which Tesla accepted BitcoinBitcoin is the first decentralized digital currency. It was created in 2009, by an anonymous founder or group of founders... More (BTCAn abbreviation for Bitcoin.) as a payment method. Recently, in an announcement that nobody expected, Elon Musk (Tesla CEO) declared that his company will stop accepting the first cryptocurrencyA digital currency running on a blockchain and built with cryptography. Contrary to central-bank issued currency, cryptocurrency issuance rules are... due to environmental concerns. This would be because of the amount of energy consumed to secure the Bitcoin network.
To strengthen his argument, Musk quoted the Cambridge Bitcoin Electricity Consumption (CBEI). According to this chart, Bitcoin is consuming around 148 TWh annually, which is more than Sweden, Ukraine, or the Netherlands.
He focused on that data but forgot to mention that, as indicated by the same source, Bitcoin only accounts for 0.69% of the total energy consumption. Besides, “the amount of electricity consumed every year by always-on but inactive home devices in the USA alone could power the Bitcoin network for 1.5 years”.
Musk also stated (on Twitter) that Bitcoin mining is promoting the use of fossil fuels. That’s why Tesla is now rejecting the BTC payments and exploring other cryptocurrency options.
At the least, Tesla won’t sell its previous investment in Bitcoin. Instead, they’ll expect this blockchainBlockchain is a type of database storing an immutable set of data, verifiable to anyone with access to it —through... to change into greener systems to make transactions with the currency. Despite that fact, the Bitcoin price quickly fell by over 13% just after the news [CoinMarketCap]. Luckily, it’s already recovering. It’s now back to the $50,000 support.
Is Tesla in the right about Bitcoin?
All those environmental concerns about Bitcoin —not only the ones by Tesla— could be unfounded. As Changpeng Zhao (Binance CEO), commented on Twitter: “Elon probably did not research how much energy is required to run other (non-crypto) currencies that Tesla accepts.” Just as an example: the banking industry consumes over 639 TWh annually —against 148 TWh on Bitcoin.
Additionally, according to the firm CoinShares, more than 74% of Bitcoin mining uses renewable energy sources, such as hydroelectric, solar, and geothermal. So, in that case, Bitcoin and cryptos wouldn’t be contaminating. Against the belief that crypto-mining is promoting the use of fossil fuels, it may actually be the opposite.
Indeed, crypto-mining with the system Proof-of-Work (PoW) uses on purpose a lot of electricity to solve complex mathematical problems. That’s why the miners always look for cheaper sources of energy, and that usually means renewable energies. Carbon and fossil fuels are often too expensive to make profitable the crypto-mining.
Some companies seem to know this already. Moneygram, Yum Brands (Pizza Hut, Taco Bell, KFC), and Cola-Cola are accepting crypto payments in several parts of the world. These ones, of course, apart from the more than 22,200 listed by CoinMap. In the future, the list promises to be much longer.
Featured Image by Pete Linforth / Pixabay
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