Elon Musk is back to his usual Bitcoin fondling antics. The Tesla frontman now says the EV maker will accept Bitcoin as payment when miners use more renewable energy.
Back in March, Tesla began accepting Bitcoin as payment for its EVs in the US. While Bitcoin maximalists sang from the tops of their fat stacks of Sats, the rest of the world put the move under the environmental microscope.
Tesla was denounced for its move to accept Bitcoin as it’s fundamentally at odds with its mission as a company, which is to reduce emissions, and help usher in a new era of sustainable living.
By May, Tesla had paused accepting Bitcoin as payment for its vehicles. On Twitter, Musk said the company was concerned about the “rapid increasing use of fossil fuels for Bitcoin mining and transactions, especially coal…”
Cryptocurrency mining, the process used to create new coins and validate transactions, uses a lot of energy. It’s a common media trope to compare Bitcoin’s energy demands to that of whole countries. In fact, to date Bitcoin has used more energy than the likes of Sweden, Argentina, and Malaysia.
Using that amount of energy isn’t a problem per se, but where that energy comes from is important to consider.
Musk isn’t convinced and said that Tesla will begin accepting Bitcoin again when there’s confirmation that around 50% of its energy use is supplied by renewable sources.
This is inaccurate. Tesla only sold ~10% of holdings to confirm BTC could be liquidated easily without moving market.
When there’s confirmation of reasonable (~50%) clean energy usage by miners with positive future trend, Tesla will resume allowing Bitcoin transactions.
— Elon Musk (@elonmusk) June 13, 2021
It’s worth noting that in some parts of the world, Bitcoin miners gravitate to renewable energy. In places where it’s abundant and cheap, like Iceland with its geothermal power, and Georgia which uses hydroelectric energy, it’s the best economic choice for miners. In these places, miners are incentivized to use renewable energy.
The problem is, there doesn’t seem to be a definitive figure on how much renewable energy the cryptocurrency uses. Some have quoted 39%, others as much as 76% — but it’s a nuanced issue.
Late last year, a survey conducted by Cambridge University’s Center for Alternative Finance, found that 76% of miners claimed to use renewable energy as part of their power mix.
However, that very survey also found that just 39% of Bitcoin’s total energy consumption is satisfied by renewables.
As the world moves to renewable power, Bitcoin will get slightly greener, as will everything else. For the time being, that it’s not quite good enough for Tesla.
I do wonder if anyone has told Musk that Bitcoin uses less power than conventional banking. If the company really cares about the environment, perhaps it should stop using money all together.