Tesla suspends using Bitcoin as a payment method

May 13, 2021 Thoughts

Just a little over three months ago, on 8th Feburary 2021, Tesla has officially announced buying $1.5 billion worth of Bitcoin. The price of Bitcoin surged drastically and passed beyond $60k. A month after that, on 24th March 2021, Elon Musk announced on his twitter account that Tesla is accepting Bitcoin as a payment method.

Concern over energy efficiency for Bitcoin mining

It doesn't seem to last long. Many people in crypto community shocked to see the announcement by Tesla CEO, Elon Musk on his twitter. He said Tesla will no longer accept Bitcoin as payment menthod for car purchases. Tesla is concerned about energy consumption for Bitcoin mining and transaction. However, he also stated that Tesla will not be selling any Bitcoin.

Followed by the announcement, Bitcoin price dropped almost 20%. We don't know what Tesla is going to do with those Bitcoin for now. However, according to the statement, Tesla will continue to use Bitcoin for transaction when there is a sustainable energy for mining transaction.

Does Bitcoin really have an impact on environment that much?

According to Canbridge Bitcoin Electricity Consumption Index, the average energy usage for Bitcoin mining is 20.42 GW, which is 149.63 TWh annually (at the time of writing this). That is indeed a lot. However, the question is how much energy does it actually use to operate Financial Institution and circulating fiat currencies? Bitcoin as well as most other currencies like Ethereum uses Proof-of-Work method for verification, which indeed needs a lot of computational power. Therefore, many other cryptocurrencies are now working on Proof-of-Stake concept, for example Cardano. Interestingly, Ethereum is also working on migrating the current Blockchain to Proof-of-Stake mechanism.

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