Tesla pulls back on accepting Bitcoin for environmental reasons

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Tesla (NASDAQ: TSLA) has made waves this year when its CEO and Founder, Elon Musk, said the company would be accepting Bitcoin payments for its Tesla cars. That was a pretty big deal for a fortune 500 company to accept crypto, and many expected this would kickstart some sort of wide-spreading trend. However, Tesla has since backed down from this promise, now saying that it won’t be taking Bitcoin anymore due to potential environmental issues surrounding bitcoin miners.

One frequent criticism of Bitcoin, especially Bitcoin miners, is that it’s a very energy-taxing activity. Back when mining was a lot easier, it was possible to actually make a profit from mining bitcoin. Nowadays, however, it takes so much energy that it’s not worth it for most people. To put into comparison just how much energy Bitcoin mining uses, it would be comparable to countries like the Netherlands or Argentina. Unlike newer cryptocurrencies, Bitcoin is still using the older, Proof-of-Work (PoW) consensus mechanism, which requires miners to validate transactions in a resource-intensive manner.

Tesla has suspended vehicle purchases using Bitcoin. We are concerned about the rapidly increasing use of fossil fuels for Bitcoin mining and transactions, especially coal, which has the worst emissions of any fuel,” tweeted Elon Musk in regards to his company and Bitcoin. “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% of Bitcoin’s energy/transaction.”

Some critics have quickly jumped on Musk’s comments in an attempt to debunk him. One crypto influencer, Anthony Pompliano, responded to Musk’s tweet by saying that 75% of all Bitcoin miners use renewable energy isn’t of traditional fossil fuels. If you aren’t aware, he’s referring to a 2020 study by the University of Cambridge which found a majority of miners were using some type of eco-friendly energy source. That’s partially because being closer to areas that produce these types of power, like hydroelectric power plants, tend to have lower electricity bills.

Tesla also announced that car purchases in China were down 28% from the previous month. Considering China is the largest potential EV market in the world, it’s the last piece of news Tesla needs to hear at the moment.

Tesla’s stock was down around 5.7% in response to the news. While not necessarily bad news for Tesla itself, Bitcoin prices haven’t been doing that well recently, and this news will definitely isn’t helping. Prices for the flagship crypto are down over 10.3% right now, falling to approximately $51,200. Ever since Turkey first announced it planned to ban cryptocurrencies, Bitcoin prices haven’t yet fully recovered.

 

Tesla Company Profile

Founded in 2003 and based in Palo Alto, California, Tesla is a vertically integrated sustainable energy company that also aims to transition the world to electric mobility by making electric vehicles. It sells solar panels and solar roofs for energy generation plus batteries for stationary storage for residential and commercial properties including utilities. The Tesla Roadster debuted in 2008, Model S in 2012, Model X in 2015, Model 3 in 2017, and Model Y in 2020. Global deliveries in 2019 were 367,656 units. Tesla went public in 2010 and employs about 50,000 people. – Warrior Trading News

 

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