Musk move highlights controversy over cryptocurrency emissions
Tesla won’t allow people to buy its cars using Bitcoin, CEO Elon Musk said this week, citing the cryptocurrency’s high fossil fuel use.
“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 said via Twitter on Wednesday. “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.”
The announcement is a 180-degree flip for Tesla, which invested $1.5 billion in Bitcoin earlier this year and began allowing people to buy its electric cars using the cryptocurrency in March.
Following Musk’s announcement Wednesday, the price of Bitcoin plummeted by more than 15%, according to news reports.
The concerns about Bitcoin’s energy use aren’t new, however. Energy analysts have been cautioning that the cryptocurrency is “energy-hungry” for years. A study released last month in the peer-reviewed journal Nature of the Bitcoin industry in China found it has a carbon footprint as large as one of the country’s 10 largest cities.
Mining Bitcoin and processing its transactions alone consumes more energy annually than the entire country of Egypt or Sweden, according to the University of Cambridge, which tracks the industry’s electricity usage. If the Bitcoin industry was a country, it would rank as the 25th highest energy consumer, per Cambridge’s data.
Musk, citing Cambridge’s data, said the spike in Bitcoin’s energy usage in recent months has been “insane.” He added Tesla intends to use Bitcoin for transactions “as soon as mining transitions to more sustainable energy.”
The energy-intensive Bitcoin industry has been a boon to some fossil fuel facilities, however.
For example, local officials in New York last month approved the expansion of a Bitcoin mining center on-site at a natural gas plant, according to local news reports.
“It’s really hard to say whether Bitcoin miners are going to be using an increasing amount of renewable energy,” Alex de Vries, the founder of Digiconomist which tracks Bitcoin energy consumption, told Marketplace on Wednesday. He added he considers it “very unlikely” and noted “more than half” of the Bitcoin network uses fossil fuels.
“We’ve seen that in several areas — in Montana, in New York very recently, and even Kentucky thought it was a great idea to try to attract these miners to save their obsolete coal fields,” de Vries added.
Cryptocurrency backers, however, say there is cause for optimism that Bitcoin’s carbon footprint will lessen.
Nic Carter, a founding partner of Castle Island Ventures, which works on cryptoassets, told Bloomberg TV he’d like to see Bitcoin miners disclosing their energy mix and their power sources, but he noted some Bitcoin mining is coming to the United States, which has a “greener grid” than China.
Bitcoin miners’ “duty is to render themselves as environmentally friendly as possible or buy carbon offsets if they can,” Carter added.