Tesla will no longer accept Bitcoin because of climate problems, Musk says

Tesla has suspended buying vehicles with Bitcoin amid climate change concerns, its CEO Elon Musk said in a tweet.

Bitcoin fell more than 10% after the tweet, while Tesla shares also fell.

Tesla’s March announcement that it would accept the cryptocurrency met with an outcry from some environmentalists and investors.

The electric car maker announced in February that it had bought $ 1.5 billion (£ 1 billion) of the world’s largest digital currency.

But on Thursday it traced its previous comments.

“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,” wrote Musk.

“Cryptocurrency is a good idea … but it cannot come at a high cost to the environment.”

He also said the electric car maker will not sell Bitcoin and intends to use it for transactions once mining moves to more sustainable energy.

Market analysts see the move as an attempt by Tesla to allay concerns from investors focused on climate change and sustainability.

“Environmental, social and corporate governance issues (ESG) are an important motivation for many investors today. Tesla, a clean energy company, may want to do better in the environmental space of ESG, ”Burman Invest’s Julia Lee told the BBC.

“But a cynic might suggest that this is just another move by Elon Musk to sway the cryptocurrency market as he has done on so many other occasions,” she added.

Elon Musk is hardly ill-informed about technology and the environment. When I interviewed him in 2016, he spoke passionately about Tesla’s mission to make traffic sustainable in the fight against the “existential threat” of climate change.

So it’s a bit surprising that he just woke up that Bitcoin isn’t exactly a green project. Cambridge University’s Center for Alternative Finance maintains a Bitcoin Power Consumption Index. It is currently shown that the process of mining cryptocurrency, which uses large amounts of computer processing power, is consuming more electricity each year than Malaysia or Sweden and is approaching the annual consumption of Egypt.

Bitcoin enthusiasts insist that mining is primarily based on renewable energies. The truth is that miners focus on what is cheapest, and in China, where many of them are based, it is often coal-generated electricity.

When Elon Musk announced his grand plans for cryptocurrencies in February and named Tesla’s Chief Financial Officer “Master of Coin”, he sparked a surge in the value of Bitcoin and the adoration of his fanatical followers. Now that the price is falling, the chat rooms are full of angry and disappointed – many of them wearing the Bitcoin avatar with shining eyes – accusing their former hero of treason.

A move recognized as a sign that Bitcoin is becoming mainstream has shown how volatile – and downright scaly – the entire cryptocurrency scene can be.

Last month, Tesla announced that profits were $ 438 million for the first three months of the year, up from $ 16 million last year, boosted by bitcoin sales and environmental loans.

Mr Musk was one of the world’s best-known proponents of cryptocurrencies and tweeted frequently about Bitcoin and the once obscure digital currency, Dogecoin.

His tweets over the past few months have helped make Dogecoin, which started as a social media joke, the fourth largest cryptocurrency in the world.

What are the climate concerns around Bitcoin?

Bitcoin is developed by miners who use powerful computers to compete against each other and solve complex math puzzles.

It is an energy-intensive process that often relies on electricity generated from fossil fuels, especially coal.

The dominance of Chinese bitcoin miners and the lack of motivation to switch from cheap fossil fuels to more expensive renewable energy sources could result in few quick fixes to bitcoin emissions concerns.

According to recent research, China accounts for more than 75% of Bitcoin mining worldwide.

The cryptocurrency’s carbon footprint is as large as one of the 10 largest cities in China, according to the study.

This is because these bitcoin miners use fossil fuels, mostly coal, electricity for most of the year and only switch to renewable energy, mostly hydropower, during the rainy summer months.

Bitcoin supporters point out that the mainstream financial system, with its millions of workers and computers in air-conditioned offices, also consumes large amounts of electricity that is normally generated using fossil fuels.

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