Elon Musk, CEO of Tesla and SpaceX, surprised the market this past Wednesday (12) by announcing that his electric car company will no longer accept payments in bitcoin (BTC) due to concerns about the increasing use of polluting energy in cryptocurrency mining. As a result, the price of the digital currency plummeted about 15% hours after the billionaire’s declaration and reached its lowest value since the beginning of March.
“Tesla has suspended purchases of vehicles with bitcoin. We are concerned about the rapid growth in the use of fossil fuels for mining and cryptocurrency transactions, especially coal, which has the worst emission levels of any fuel, ”said Musk in a post on Twitter.
Elon Musk changes his stance on bitcoin
After the declaration, the price of bitcoin plummeted. The cryptocurrency was trading for more than $ 55,000 early yesterday evening, but dropped to a low of $ 46,000 two hours after Musk’s tweet, according to the index CoinDesk.
Tesla’s CEO is seen as a leading proponent of digital currencies. Since the beginning of the year he has shown his support publicly numerous times, always driving the market with his statements about bitcoin and dogecoin. Now, Musk seems to have changed his stance.
“Cryptocurrency is a good idea in many ways and we believe it has a promising future, but it cannot have a great cost to the environment. Tesla will not sell any bitcoin and we intend to use it for transactions as soon as mining migrates to more sustainable energy. We are also looking at other cryptocurrencies that use less than 1% of the energy per bitcoin transaction, ”concluded Musk on Twitter.
Tesla is one of the leading bitcoin investors
Tesla revealed in February that it bought $ 1.5 billion in bitcoin as part of a new strategy to diversify its unused revenue. The news became an important factor that legitimized cryptocurrency as a viable alternative for institutional investors and was one of the factors that boosted its price.
Shortly after the billionaire acquisition, Tesla was widely criticized for supporting a cryptocurrency that has such an environmental impact. At the time, the investment was seen as contradictory to the principles of the electric car company, which defends the environment and the use of clean energy.
In late March, the company announced that it would accept bitcoin payments for its vehicles, another piece of news that heated up the market at the time. The company has not released data on sales that have occurred through the cryptocurrency since then.
Tesla’s first financial results released in April also revealed that bitcoin has already proved very beneficial for the company. Thanks to the investment in cryptocurrency, Musk’s company had its best quarterly balance sheet in its history by selling 10% of its reserves of digital assets, earning more than $ 100 million.
After all, why is bitcoin polluting?
“The trend in energy use in recent months is insane,” tweeted Musk on Thursday (13). He shared a graph of cryptocurrency mining consumption, data from the Cambridge Bitcoin Electricity Consumption Index (CBECI) that indicate that digital currency mining currently consumes more than 149 TWh (terawatt-hours), surpassing the consumption of entire countries like Malaysia and Sweden.
Energy usage trend over past few months is insane https://t.co/E6o9s87trw pic.twitter.com/bmv9wotwKe
– Elon Musk (@elonmusk) May 13, 2021
According to CBECI, in the last three months alone, energy consumption to maintain the cryptocurrency has grown by almost 30%. This is a problem especially since most bitcoin miners are concentrated in China, a country where the main energy matrix is coal. Thus, keeping countless machines on 24 hours a day processing and encrypting digital currency transactions from around the world becomes an aggressive activity for nature.
In early April, the magazine Nature published a study that revealed that, at the current pace, bitcoin mining in China is expected to generate 130 metric tons in carbon emissions by 2024. The survey also showed that 80% of all cryptocurrency transactions in the world are processed in the country, while it is estimated that 40% of its present power plants are fed with coal.
With information: CNBC