Tesla bails on bitcoin over carbon footprint

By Fergus Halliday

May 13 2021
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Elon Musk’s flirtation with cryptocurrencies might be over, with the tycoon announcing that Tesla will no longer accept bitcoin as a form of payment.

Tesla bails on bitcoin over carbon footprint

“Tesla has suspended vehicle purchases using bitcoin,” the Tesla CEO said in a statement posted via Twitter.

In March, Mr Musk announced that Tesla would begin accepting bitcoin as an alternative to conventional currencies.

Just days later, Tesla disclosed to the SEC that they had purchased US$2 billion worth of bitcoin. The car company later sold 10 per cent of this investment for a return of US$101 million.

Now, Mr Musk says Tesla is “concerned about rapidly increasing use of fossil fuels for bitcoin mining and transactions, especially coal, which has the worst emissions of any fuel”.

“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.”

“Tesla will not be selling any bitcoin, and we intend to use it for transactions as soon as mining transitions to more sustainable energy. We are also looking at other cryptocurrencies that use < 1 per cent of bitcoin’s energy/transaction.”

Debates about the energy consumption and climate impact of bitcoin and other blockchain-based cryptocurrencies have become more common in recent years.

Research by digiconomist.net founder Alex de Vries back in March suggested that the bitcoin network could consume as much energy as all data centres globally. That energy has come from somewhere, and according to de Vries, the associated carbon footprint equals that of London.

For comparison, the carbon footprint of a single bitcoin transaction is equivalent to that of 751,205 Visa transactions.

In the wake of increased awareness of this growing issue, blockchain networks like ethereum have looked to offset the climate impact of cryptocurrency mining through a new proof-of-stake system.

Other bodies like the Crypto Climate Accord are looking to shift the entire cryptocurrency industry towards renewable and sustainable resources by 2030.

Regarding today’s announcement, RMIT’s Dr Angel Zhong noted that “Tesla has been flagging itself as the company that uses sustainable energy to power cars. As such, Tesla is included in a lot of sustainable and/or green ETFs”.

By accepting bitcoin as payment, Dr Zhong believes that Tesla is acting in a way that goes against its public commitment to sustainability.

“Since the acceptance of bitcoin as payment, there have been a lot of criticisms from the public and investors. That’s why Elon Musk changed his decision,” she said.

About the author

Fergus Halliday

Fergus is a journalist for Momentum Media's nestegg and Smart Property Investment. He likes to write about money, markets, how innovation is changing the financial landscape and how younger consumers can achieve their goals in unpredictable times.

About the author

Fergus Halliday

Fergus is a journalist for Momentum Media's nestegg and Smart Property Investment. He likes to write about money, markets, how innovation is changing the financial landscape and how younger consumers can achieve their goals in unpredictable times.

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