Musk decries bitcoin's energy use in Tesla payment U-turn
TESLA Inc boss Elon Musk denounced the "insane" amount of energy used to produce bitcoin yesterday, doubling down on his sudden rejection of the cryptocurrency as a means of payment over environmental concerns.
Bitcoin fell more than 10% after Musk, one of its most famous backers, tweeted his decision to suspend its use, less than two months after Tesla began accepting it as payment for its electric cars. Other cryptocurrencies, including ethereum, also fell before regaining some ground in Asian trade.
"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," Musk tweeted on Wednesday.
He followed this up yesterday, tweeting a graph of bitcoin's power consumption and saying: "Energy usage trend over past few months is insane." (https://bit.ly/33BYV8Z)
Tesla revealed in February it had bought $1.5 billion (R21.1bn) of bitcoin, the world's biggest digital currency, before announcing it would accept it as payment for its electric cars in March. The company later said it had trimmed its position by 10% in the first quarter.
The announcements turbo-charged the crypto market, driving the price of bitcoin up by about 20%. Yet they it highlighted an apparent contradiction with billionaire Musk's reputation as a champion of low-carbon technology.
Some Tesla investors and environmental campaigners have been increasingly critical about the way bitcoin is created or "mined"; high-powered computers compete to solve complex mathematical puzzles in an energy-intensive process that often relies on fossil fuels, particularly coal.
Musk said he backed that concern, especially the use of "coal, which has the worst emissions of any fuel". Tesla would retain its bitcoin holdings with the plan to use the cryptocurrency as soon as mining transitioned to more sustainable energy sources, Musk said.
Some investors welcomed the U-turn. "We were surprised it took Musk so long to recognise the detrimental impact of bitcoin on the environment but are happy to see the reversal of Tesla's position," said Ben Dear, chief executive of Osmosis Investment Management, which holds Tesla stock in several portfolios.
Musk announced on Sunday that his rocket company SpaceX would accept dogecoin as payment to launch a lunar mission next year – just hours after he sent the cryptocurrency spiralling downward when he called it a "a hustle" during a guest-host spot on Saturday Night Live.
The dominance of Chinese bitcoin miners and lack of motivation to swop cheap fossil fuels for more expensive renewables could mean there are few quick fixes to the cryptocurrency's emissions problem.
Officials in Beijing are conducting a check on data centres involved in cryptocurrency mining to better understand their impact on energy consumption, sources said last month.