Tesla CEO Elon Musk declared late Wednesday that he was reversing course on his decision to embrace Bitcoin as a form of payment for vehicle purchases, in what can only be described as a “U-turn.” Musk announced that the electric vehicle maker is halting cryptocurrency transactions due to climate change issues, throwing the cryptocurrency’s prices into free fall.
“We are concerned about rapidly increasing use of fossil fuels for Bitcoin mining and transactions, especially coal, which has the worst emissions of any fuel,” tweeted Elon Musk, the chief executive officer of Tesla.
Some people are concerned that mining Bitcoin and other cryptocurrencies would have a negative effect on the setting. The following is the gist of the argument:-
Bitcoin is a decentralised digital currency that was developed as a reward for ‘mining,’ which involves using computers to solve complex mathematical algorithms. The algorithms became longer and more complicated as the currency was mined more and more, and average computers couldn’t keep up.
It is now mined using supercomputers with massive computing capacity. Naturally, these use a significant amount of energy. It’s a very energy-intensive process that currently relies on electricity produced from fossil fuels, particularly coal. According to a 2021 forecast from the University of Cambridge, bitcoin consumes more than 178 (TWh) per year, putting it in the top 10 most energy-intensive technologies.
Furthermore, studies say that Bitcoin has a good chance of driving global warming on its own, releasing enough carbon dioxide to raise global temperatures “above 2°C in less than three decades.”
Elon Musk had previously stated in February that Tesla had acquired $1.5 billion in Bitcoin and intended to accept it as payment for electric vehicle purchases. This gave the digital currency some credibility, which many people had been sceptical of up until then.
Tesla’s unexpected launch served as a visible spark in the cryptocurrency movement, sending Bitcoin’s prices up 16 per cent on the same day, the largest one-day increase in a long time. Many saw it as a sign of cryptocurrency’s growing popularity as a payment and investment option.
Elon Musk’s decision to suspend Bitcoin transactions for Tesla vehicles on Wednesday, an announcement as unexpected as the previous one, sent shockwaves through the group. This time, Bitcoin fell as much as 15% in Asian trading, falling below $50,000, before recovering some of the losses, according to Bloomberg. As of 10:53 a.m. in Tokyo, it was down about 8% to $50,190. As people hurried to sell, there were rumours of outages at digital-token exchanges.