cryptocurrencies

Musk makes U-turn on bitcoin citing environmental grounds

Representations of Bitcoin are seen in front of Tesla logo. Photo credit: Reuters / Dado Ruvic.

By Anders Lorenzen

The CEO of the luxury EV car maker Tesla Elon Musk has long been adored by the supporters of the world’s leading cryptocurrency bitcoin but support could be waning after he has been forced into an embarrassing couple of u-turns.

Bitcoins for Teslas

Earlier this year Musk and Tesla made headlines after they bought $1,5 billion worth of bitcoin and announced customers could use the digital currency to purchase Tesla models. These two actions saw a significant increase in the value of both bitcoin and other cryptocurrencies.

Enormous carbon footprint

But last month Musk suddenly announced that Tesla would no longer accept bitcoin for car purchases due to the enormous carbon footprint of bitcoin. Mining bitcoin is a hugely energy-hungry process much of which is powered by coal. Some estimates say that the carbon footprint of bitcoin equals that of the whole of Italy.

Musk’s green reputation in danger

Musk had been caught in between his reputation as an environmentalist and his love for cryptocurrencies with his green image seeing considerable damage following is bitcoin support. Musk eventually relented stating “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,”. 

Musk said that Tesla plans retain its bitcoin holdings and will re-adopt the cryptocurrency as soon as mining transitions to more sustainable energy sources. 

Other cryptocurrencies in the picture

Musk said that in the meantime the company is looking at other cryptocurrencies which use a fraction of the energy bitcoin does.

A different perspective 

On the flip side, some bitcoin proponents note that the existing financial system – with its millions of employees, computers in air-conditioned offices and reliance on data centres – uses large amounts of energy too and many banks continue to be huge investors in fossil fuels.

China as a bitcoin hub

The majority of bitcoin miners are based in China and opt to use coal energy rather than renewables as it is cheaper to purchase. Beijing officials are reportedly said to be undergoing checks to find the data centres which are involved in cryptocurrency mining and the country could move to crack down on it. But many experts speculate there is no quick fix for bitcoin’s huge energy and carbon footprint. 

Many cryptocurrencies are vying for the spots for the greenest cryptocurrency; something you can expect Musk to keep a close eye on.

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