Why did Elon Musk and Tesla suddenly turn against Bitcoin?

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Elon Musk, the richest man

Elon Musk suddenly turned to Bitcoin out of concerns about energy use and said that his electric car company, Tesla, would no longer accept cryptocurrency as a payment method-but his decision Will it have an impact, and will Tesla switch to alternative currencies?

Tesla bet on Bitcoin with a $1.5 billion investment earlier this year and paid off: Bloomberg estimates that the company made $1 billion in purchases in the first quarter of 2021.

At the time, Musk was criticized for investing in cryptocurrencies. Many people pointed out that the environmental damage caused by his massive use of electricity was inconsistent with Tesla’s obvious green certificate.

Now, Musk seems to have come to the same conclusion. He tweeted on May 12 that Tesla will suspend bitcoin sales because of concerns that “the use of fossil fuels in bitcoin mining and trading is rapidly increasing, especially It’s coal, and its emissions are the most serious of all fuels.”

“Cryptocurrency is a good idea on many levels, and we believe it has a promising future, but this will not come at a huge environmental cost,” he added.

Bitcoin is created or mined using a concept called proof of work, which involves solving the problem of useless and computationally difficult functions that consume a lot of electricity. The currency’s annual electricity consumption is estimated at 148 TWh, and it is rising, roughly the same as Poland’s electricity consumption. To make matters worse, some of this energy comes from coal-fired power stations.

Musk said that Tesla will neither accept nor sell any bitcoins at this time, but does plan to use its reserves after mining “transitions to more sustainable energy.”

Carol Alexander of the University of Sussex in the United Kingdom said that just holding bitcoins instead of trading with them will not produce a carbon footprint, so Musk’s move will have an impact on reducing Tesla’s future emissions.

Bitcoin is not the only cryptocurrency involved in Musk’s business. According to reports, one of his other companies, SpaceX, has accepted Dogecoin for satellite launches, even though he called Dogecoin “hustle” when he appeared live on Saturday night on May 8th, causing the price to drop by 35%. . On May 11, Musk posted a poll on Twitter asking whether his follower Tesla should accept Dogecoin as payment. Tesla did not respond to the new scientist’s request for comment.

Dogecoin uses less energy per transaction than Bitcoin because the calculations used to mine coins are less complicated. Bitcoin requires 707 kWh per payment, while Dogecoin only requires 0.12 kWh, so conversion can reduce special Slug’s impact on the environment.

Or, there are other cryptocurrencies that use different methods to protect transactions, such as controlling their blockchain based on the number of coins or the amount of hard drive space someone has, although Musk has not issued a public statement on this.

No matter where Musk’s idea of ​​cryptocurrency goes next, the billionaire’s tweets will obviously have a significant impact on the industry. His anti-Bitcoin stance caused Bitcoin to immediately fall by 15%, but the price rose again. Of course, considering the energy usage of each transaction, this market frenzy has its own environmental impact.



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