Less than two months ago, Tesla announced it would accept Bitcoins as payment for vehicles in lieu of cash. Now, the company has halted those plans, citing fears that continuing with them could cause environmental damage. Here’s the statement from CEO Elon Musk. The embed may be a bit clipped below for some reason; the tweet begins: “Tesla has suspended vehicle purchases using Bitcoin.” It then continues with “We are concerned,” as below:
Tesla & Bitcoin pic.twitter.com/YSswJmVZhP
— Elon Musk (@elonmusk) May 12, 2021
All cryptocurrency mining is inefficient to one degree or another, but Bitcoin’s transaction costs, in terms of electricity, are staggeringly inefficient. Dogecoin consumes 0.12 kilowatt hours (kWh) per transaction. Litecoin burns 18.52 kWh. BTC, according to this chart, requires 707 kWh per transaction. A report published back in 2019, well before the current surge in mining activity, estimated BTC mining worldwide emitted enough CO2 to be considered somewhere between the 82nd and 83rd largest country in the world. More recently, it’s been compared with the electricity consumption in the Netherlands.
Concerns about the environmental impact of BTC mining specifically, and cryptocurrency more generally, have been growing for years. New York State is considering a bill that would ban cryptocurrency mining in the state while an environmental impact assessment is conducted. The state is considering such radical action because a venture capital firm, Atlas Holdings, bought an out-of-commission coal power plant, retrofitted it for natural gas, and is now using its own self-generated electricity to mine BTC.
This strategy has been phenomenally successful for the plant, which currently dedicates 79 percent of its power output to mining BTC, for a total of 85W. Because it owns its own power plant, the company is effectively immune to price hikes or usage taxes. Atlas Holdings plans to expand its facility to dedicate 500MW of power to mining Bitcoin by 2025.
Tesla sold some of the $1.5B in Bitcoin it previously purchased, to pad out its Q1 2021 figures a bit, but Musk has pledged not to continue selling it off until the environmental concerns can be dealt with. Elon Musk has recently hyped Dogecoin, which has a much smaller environmental footprint than BTC, but it’s not clear if Musk intends to pivot his company’s cryptocurrency strategy to a different coin, or if Tesla will hold off on entering the crypto market again while it conducts some additional studies.
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