Tesla will resume accepting bitcoin as payment once the mining rate for the cryptocurrency reaches 50% renewable, CEO Elon Musk said on Wednesday in a virtual panel discussion organized by the Crypto Council for Innovation, which is in line with He made the statement on Twitter last month.
Tesla began accepting bitcoin as payment in February, the same time the company bought a historic $1.5 billion in bitcoin — before retracting its decision three months later, citing environmental concerns.
Cryptocurrencies get a bad rap for energy use because they actually use a lot of energy, at least many of them do. Bitcoin and Ethereum, the two largest currencies in the space, use a mechanism called proof-of-work to power their networks and create new blocks of each currency. The “work” is solving complex cryptographic problems and miners do this by linking together high-end graphics cards to deal with these problems. Major mining centers have thousands of GPUs running round the clock.
While Ethereum is already committed to making the transition from proof-of-work to something called proof-of-stake, which greatly reduces energy use, bitcoin’s chances of this transition are slim. Therefore, becoming “environmentally friendly” does not mean making any major underlying changes to bitcoin, but rather shifting the energy sources that are powering those mining centers.
While bitcoin’s global mining network clearly depends on renewable energy, it is very difficult to get accurate information about how the spread of renewable use is given, ahem, how decentralized the grid is. It’s clear it’s going to take some unprecedented transparency from the global network, even to give Musk a starting point here to judge bitcoin’s current or future “eco-friendliness,” and In all likelihood, Musk will have plenty of room to make this decision based on anecdotal data whenever he wants to.
Today’s comment comes as no surprise: “Tesla will resume allowing bitcoin transactions when reasonable (~50%) clean energy use by miners is confirmed with a positive future trend,” he tweeted in June. will do it.”
this is wrong. Tesla only sold ~10% stake to confirm that BTC can be easily liquidated without market cap.
Once reasonable (~50%) clean energy use by miners is confirmed with a positive future trend, Tesla will resume allowing bitcoin transactions.
— Elon Musk (@elonmusk) 13 June 2021
However, his comments place him quite shaky. “As long as there is a conscious effort to move bitcoin miners towards renewable energy, Tesla can support it,” he added later in the conversation. A large proportion of bitcoin mining was done in China, where cheap coal and hydropower made it slightly more affordable; But Musk noted that some of these coal plants have been shut down (and a large proportion of miners in China have begun to migrate overseas in response to mining crackdowns by the Chinese party).
It should also be noted that his concerns over the environmental impact of bitcoin have caused controversy in the bitcoin community, with some arguing that bitcoin receives a significant amount of scrutiny relative to its actual energy consumption. Twitter CEO Jack Dorsey, who also participated in the virtual panel, has in fact argued that bitcoin could encourage the transition to renewable energy. A white paper published by the Bitcoin Clean Energy Initiative, a program maintained by Square, argues that bitcoin mining could make renewable energy cheaper and more economically viable than it is today.
Musk’s comments, vague as they were, show that he still wields considerable power over the cryptocurrency markets. After hitting an all-time high of over $63,000 in April, bitcoin price fell below $30,000 on Monday. But when the billionaire founder revealed more about himself and his companies’ holdings in the virtual panel, the price went up again.
In addition to personal bitcoin holdings and Tesla’s bitcoin holdings, his aerospace company SpaceX also owns bitcoin. Musk said that he also personally owns Ether and (of course) Dogecoin. The price of all three cryptocurrencies went up after his comments.