Tesla made news back in February by announcing it had invested $1.5 billion into Bitcoin and would soon been taking it as a form of payment, helping spur the cryptocurrency on to all-time highs north of $50,000 in the following weeks. CEO Elon Musk turned all that on its head today, stating that Tesla will no longer accept Bitcoin as payment nor purchase any further holdings over environmental concerns regarding the energy needed to mine the cryptocurrency.
In a Twitter post, Musk states “Tesla has suspended vehicle purchases using Bitcoin. 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.” Musk goes on to address much of the criticism the company received when it first invested in the cryptocurrency, saying “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.”
Following the post was an almost-instantaneous drop in Bitcoin prices, down 14 percent over the last day at the time of writing and dipping below $50,000 for the first time since late April (it’s since leveled out right around $50,000). The statement has drawn suspicion of a deliberate move to influence the Bitcoin price—far from the first time the Tesla CEO has been accused of trying to move markets.
However, the statement does claim that Tesla will hang on to its Bitcoin holdings for now, explaining that “Tesla will not be selling any Bitcoin and we intend to use it for transactions as soon as mining transitions to more sustainable energy.” The Tweet also doubles down on supporting the general idea of cryptocurrencies, saying “We are also looking at other cryptocurrencies that use <1% of Bitcoin’s energy/transaction.”
Dogecoin conspiracies aside, Tesla’s stated concerns are valid, of course—Bitcoin’s environmental footprint is a significant one. The currency works by having millions of distributed computers racing to solve hash equations, with the fastest hashing operations securing the lion’s share of the Bitcoin in a process referred to as “mining”. The Cambridge Bitcoin Energy Consumption Index estimates the annual energy consumption of the Bitcoin network at 147.79 terawatt-hours at the time of writing. With the network mining a “block” of 6.25 new bitcoins roughly every ten minutes, this comes out to 2811.8 megawatt-hours of energy per block, or 449.9 megawatt-hours of energy used to mine each Bitcoin.
As a comparison, a Tesla Model S comes with a 100 kilowatt-hour battery. For the energy used to mine one Bitcoin, you could fully charge that Model S every day for 4,499 days—that’s 12 full years. In even simpler terms, the cryptocurrency now uses more electricity than the entire country of Argentina.
It’s not actually clear how many payments the company received in Bitcoin over the last few months. The Tesla website has already removed its Bitcoin support page, which outlined how customers could use the cryptocurrency for purchases. Over the years, though, many individuals have used the currency to purchase cars, from Priuses to, of course, Lamborghinis. Often, the transactions are looked at with some level of regret as the currency has continued on to ever greater peaks in following years.
The coming days are likely to be tumultuous on the cryptocurrency markets, as bulls and bears fight for every last digital token. Internet sleuths will likely be combing Bitcoin’s blockchain for evidence that Tesla is remaining true to its word, or whether it liquidated its holdings on the sly. The benefit of the cryptocurrency is that for as anonymous as it can be, every transaction occurs out in the open. Whether Tesla will be caught out in a gambit, or whether their statement is an earnest backing of environmental concerns, will surely be revealed in due time.
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