Tesla’s outspoken CEO – or Technoking – Elon Musk has announced the EV carmaker has “suspended vehicle purchases using Bitcoin”. It comes barely more than three months after Tesla purchased $1.5 billion US in Bitcoin as a digital asset on Feb 8, 2021.
The decision to withdraw the world’s most well-known cryptocurrency from the ways that customers can pay for a car is reportedly based on the impact on carbon energy usage required to mine and verify transactions for the crypto. The BBC has previously reported that computing power necessary for Bitcoin’s uses exceeds all of Argentina’s power usage, and consumption is around 121.36 terawatt-hours (TWh) per year. The BBC report states that “if Bitcoin was a country, it would be in the top 30 energy users worldwide”.
On news of Tesla’s shift away from accepting Bitcoin as payment, the cryptocurrency’s value tanked about 17% within a few hours but recovered about half of that loss quickly.
Lines up with Tesla’s values
From as early as 2013, Tesla has said the corporate vision is “to accelerate the advent of sustainable transport by bringing compelling mass market electric cars to market as soon as possible”. Their mission statement includes building an “infinitely scalable clean energy generation… towards a zero-emission future”. As Bitcoin’s energy consumption comes to light – particularly the energy from coal-fueled electricity generating stations – pausing the ability to pay with the crypto does line up with the company’s ethos.
Musk mentions in the tweet, “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 less than 1% of Bitcoin’s energy/transaction.”
Transition to Dogecoin possible
It’s widely assumed that Musk is referring to Dogecoin in his tweet as an alternative cryptocurrency for payment. He’s been a proponent of what’s been dubbed a ‘meme coin’ that’s based on the famous Shiba Inu meme and was originally established as a joke. However, Dogecoin has grown exponentially in the past two months and now occupies the fourth position as most valuable crypto coin.
Musk mentioned the coin when he hosted SNL on May 8 and has even tweeted that SpaceX’s mission to send the Doge-1 satellite to the moon next year is being paid in Dogecoin. The community has affectionately made Elon Musk their “Dogefather”.
Perhaps a personal beef?
The founder and CEO of Digital Currency Group (DCG.co) Barry Silbert recently called out Musk indirectly on Twitter, saying that Dogecoin users and holders should convert their Dogecoin to Bitcoin, and that DCG was shorting the meme coin. Shorting Dogecoin would stand to benefit Silbert whose company holdings include Bitcoin Investment Trust and is one of the biggest players in Bitcoin.
It’s possible the challenge to Musk was a catalyst to make the change at Tesla, although Musk is also well-known for making public mission-based or ethical decisions. Yet, for an EV carmaker, lowering the energy usage by a cryptocurrency could also allow for EV charging infrastructure implementation.
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