Tesla CEO Elon Musk has announced that the company will start accepting payments using Bitcoin once there’s reasonable confirmation that miners are utilizing clean energy. The news has given Bitcoin holders some hope that the ongoing FUD in the digital assets market will soon subside.
Earlier in May, Tesla announced that it would no longer accept payments via Bitcoin because they were increasingly concerned about the use of fossil fuels, especially coal, that was being used to mine the cryptocurrency. Let’s take a closer look.
Bitcoin and Energy Usage
When it comes to energy consumption, the first area of concern is Bitcoin mining now takes up a monumental amount of energy. It is estimated that the environmental impact is an estimated 34 megatons of carbon emissions every year. It makes sense that as Bitcoins become rarer, finding them is more energy-intensive and ultimately wasteful because many people aren’t able to mine coins.
The second issue is that of energy consumption during the transactions themselves. Bitcoin transactions take more than 10 minutes each. Compared to other digital solutions, such as those conducted via Visa, which take a few seconds and use a fraction of the energy, it’s easy to see why Bitcoin is under fire.
Elon Musk’s Influence
While the issue of Bitcoin’s energy consumption is valid, the influence of Elon Musk in the cryptocurrency market cannot be overlooked. Earlier in June, when the Tesla CEO posted a meme of the Bitcoin sign with a broken heart next to it, the global market lost nearly $100 billion as a result. And let’s not forget the infamous Dogecoin tweet that pushed the cryptocurrency from a meme into a viable currency overnight.
There are also concerns that Elon Musk is using this influence to sway the market and selling Tesla shares at the peak of their popularity. However, Musk has denied these claims and stated that the company sold only about 10% of their Bitcoin holdings, and it was just to exhibit Bitcoin’s liquidity.
Despite the criticism, there’s strong evidence that a majority of miners already use alternative sources to mine cryptocurrency. In an interview with CNBC, an analyst with Ark Investments said that about 75% of miners already use carbon-free sources to mine Bitcoin.
Countless startups have also put together more efficient mining rigs that exclusively use renewable energy, and there are discussions underway on how to make the Bitcoin proofing process more energy-efficient itself.
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