Elon Musk, the CEO of Tesla, has suspended accepting Bitcoin for vehicle purchases. The company cited concerns “about rapidly increasing use of fossil fuels for Bitcoin mining and transactions, especially coal, which has the worst emissions of any fuel.”
“Tesla has suspended vehicle purchases using bitcoin. We are concerned about rapidly increasing use of fossil fuels for Bitcoin mining and transactions, especially coal, which has the worst emissions of any fuel.”
The announcement continued:
“Cryptocurrency is a good idea on many levels and we believe it has a promising future, but this cannot come at great cost to the Environment. Tesla will not be selling any bitcoin and we intend to use it for transactions as soon as mining transitions to more sustainable energy. We are also looking at other cryptocurrencies that use less than 1% of Bitcoin’s energy/transaction.”
Tesla & Bitcoin pic.twitter.com/YSswJmVZhP — Elon Musk (@elonmusk) May 12, 2021
As Tesla began accepting Bitcoin in March after the company revealed its Bitcoin holdings in a filing with the US Securities and Exchange Commission (SEC) earlier this year, Musk has also changed his official title from CEO to Technoking of Tesla.
Musk explained that in its Q1 filing, Tesla revealed that its Bitcoin holdings had grown to $2.5 billion after the company sold 10% of its holdings essentially to prove the liquidity of Bitcoin as an alternative to holding cash on the balance sheet.
It has been reported that Musk, who sent waves of shock, confusion, and outrage through the wider Bitcoin space in his announcement, Tesla is looking into cryptocurrencies that use less than one percent of Bitcoin’s energy per transaction, according to Musk.
However, the Tweet has caused a major backlash against the Tesla chief and his firm, with a growing number of Twitter users disclosing their cancellations of Tesla orders or announcing they would boycott Tesla products. Many people have shared their disapproval of Tesla’s justification, for a number of reasons.
I refuse to believe one of the smartest people on Earth – @elonmusk – JUST realized Bitcoin uses electricity. @APompliano we need to get to the bottom of this lol — Andrei Jikh (@andreijikh) May 13, 2021
pic.twitter.com/blfnfTnj5v — Frito2x (@Frito2x) May 12, 2021
Since Tesla began accepting bitcoin less than two months ago, the wider Bitcoin mining landscape has experienced no drastic changes that would explain environmental concerns based on new information the firm did not have access to two months ago. Many have pointed towards a comment Musk posted in response to a Tweet by Jack Dorsey in April, in which the Twitter CEO wrote that “Bitcoin incentivizes renewable energy.”
Likewise, with no apparent explanation for the change of mind, some Twitter users have speculated whether Musk is behind the decision, or whether the move is the result of external pressure from Tesla’s board or even government interference.
The Investor’s Podcast host Preston Pysh wrote in a response to Musk:
“Did someone get yelled at by the government who pays you massive subsidies so you can stay in business each quarter?”
Energy usage trend over past few months is insane https://t.co/E6o9s87trw pic.twitter.com/bmv9wotwKe — Elon Musk (@elonmusk) May 13, 2021
Along with his Tweet, Musk picked up a conversation that has seen periodic revivals over the past few years. The discussion around Bitcoin’s carbon footprint has easily caused the majority of criticism surrounding the asset in its latest bull market, and while many appreciate the environmental awareness, they believe Musk’s take on Bitcoin’s climate impact is based on misconstrued information.
The report said that much of the criticism was also directed at Musk’s inaccurate description of Bitcoin’s energy use per transaction. MicroStrategy CEO Michael Saylor wrote in response, “ironic because no incremental energy is used in a #bitcoin transaction.” Saylor further noted that on the grand scale of things, Bitcoin’s “net impact on fossil fuel consumption over time will be negative.” The energy consumed by the Bitcoin network is used to secure a trillion dollars in value. The discussion of whether this is a justified allocation of energy continues to divide opinions.
Ironic because no incremental energy is used in a #bitcoin transaction. The energy is used to secure the crypto-asset network, and the net impact on fossil fuel consumption over time will be negative, all things considered. — Michael Saylor (@michael_saylor) May 12, 2021
Moreover, a popular counter argument that many Bitcoiners have pointed out in response to Musk’s announcement is that of the hypocrisy in blaming Bitcoin’s use of energy while ignoring that of precious metals like gold or the fiat monetary system, which dwarfs Bitcoin’s energy consumption.
Many take issue with Musk’s portrayal of Bitcoin mining as a major consumer of fossil fuels and have noted the large number of miners that power their operations with renewable energy, often even using surplus energy to convert otherwise wasted energy into monetary value.
Thus, all speculation around the news that took Bitcoin holders through yet another $10,000 dip currently remains just that.