Elon Musk took to Twitter yesterday to announce that Tesla has “suspended vehicle purchases using bitcoin,” out of concern over “rapidly increasing use of fossil fuels for bitcoin mining.”
The Tesla CEO has walked back his support for the world’s biggest digital currency, which subsequently fell almost 17%. His tweet triggered an immediate market response with Bitcoin falling to its lowest point since the beginning of March. Support from Musk and Tesla had contributed to the prices of cryptocurrencies, including bitcoin and dogecoin, skyrocketing in recent months.
Now, it seems Musk has had a change of heart. “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.”
As Highsnobiety outlined recently, Bitcoin “mining” (the process of earning Bitcoin through the use of computers) often results in thousands to tens of thousands of computers operating around the clock while being cooled. As you can imagine, that uses up a lot of electricity.
Cambridge researchers say mining Bitcoin currently consumes around 110 Terawatt Hours per year. That's roughly 0.55 percent of global electricity production, and more energy than the annual consumption of countries such as Argentina, Malaysia, and Sweden. As Bill Gates put it in an interview with CNBC: "Bitcoin uses more electricity per transaction than any other method known to mankind."
Despite the significant environmental cost (which is pretty well documented, by the way) Musk isn't ready to throw the baby out with the bathwater. For now, they'll stop selling Bitcoin and will look “at other cryptocurrencies that use <1% of Bitcoin’s energy/transaction” instead.