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Tesla Suspends Vehicle Purchases Via Bitcoin Over Environmental Concerns

May 12, 2021 6:24 pm
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Tesla Suspends Vehicle Purchases Via Bitcoin Over Environmental Concerns

Tesla Inc (NASDAQ:TSLA) will no longer accept Bitcoin (CRYPTO: BTC) for vehicle purchases over concerns of the cryptocurrency environmental impact, said Tesla's CEO Elon Musk on Twitter.

What Happened: According to Musk's tweet, the automaker is concerned about the “rapidly increasing use of fossil fuels” used for Bitcoin mining and transactions.

“Cryptocurrency is a good idea on many levels and we believe it has a prominent future, but this cannot come at great cost to the environment,” the statement reads.

The automaker started accepting Bitcoin in March after it had bought $1.5 billion worth of the cryptocurrency in February.

What Else: Despite this decision, Tesla said it would not be selling “any Bitcoin,” as it plans to use it for transactions in the future, “as soon as mining transitions to more sustainable energy.”

The company added it is also looking at other digital currencies that use less than 1% of BTC energy.

Mark Cuban, Shark Tank investor and the Dallas Mavericks owner, replied to Musk’s statement, saying that the basketball franchise would continue to accept cryptocurrencies “because we know that replacing Gold as a store of value will help the environment,” citing several sources, including the New York Times and Money Week.

Why It Matters: The potential environmental damage of cryptocurrency mining has been a subject of debate and controversy.

According to Cambridge Bitcoin Electricity Consumption Index, the amount of energy needed to mine crypto assets “has historically been more than [electricity used by] entire countries, like Ireland.”

“We’re talking about multiple terawatts, dozens of terawatts a year of electricity being used just for bitcoin … That’s a lot of electricity,” said Benjamin Jones, a professor of economics at the University of New Mexico.

Other reports suggest that a lot more renewable sources of energy are involved in cryptocurrency mining than elsewhere.

According to Coindesk's research, hydroelectricity has been the most common source of alternative energy to mine bitcoin so far.

Price Action: Bitcoin price went down by over 8% minutes after the announcement. The leading cryptocurrency was trading at $51,581 at press time.

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