Last month, an article titled “The Bitcoin Clean Energy Initiative” rebutted the long-standing argument that Bitcoin mining severely harms the environment and destroys the planet. The article claimed that Bitcoin mining would encourage the increased use of renewable energy instead of carbon-emitting fossil fuels.
This article received support from many celebrities, including billionaire Jack Dorsey of Square, Elon Musk of Tesla, and Cathie Wood of Ark Invest.
In a tweet, Square stated that while renewable energy from the sun and wind can produce cheaper electricity than fossil fuels, these energy sources often generate supply far exceeding demand. According to researchers, this issue can be mitigated by building an ecosystem where solar energy, wind energy, and Bitcoin mining coexist.
Although renewable energy costs only half or a third of fossil fuel energy, the geographic limitations of renewable energy projects mean that the allocation and use of this energy source is not yet maximized. If Bitcoin “farms” were placed next to these renewable energy sources, many issues would be resolved.
Billionaire Elon Musk agreed with this perspective when he retweeted Jack Dorsey’s article, as a supporter of Bitcoin. Elon Musk’s company, Tesla, had accepted Bitcoin as a payment method to purchase electric cars, and also invested $1.5 billion to buy Bitcoin as a reserve asset.
However, after a month, Elon Musk has almost done a complete 180. Tesla announced that it would no longer accept Bitcoin for car purchases, citing that mining this cryptocurrency consumes too much energy and harms Earth’s environment.
At the same time, Elon Musk revealed that he would seek another cryptocurrency that uses fewer resources than Bitcoin. Following this announcement, the cryptocurrency market saw a significant drop, with Bitcoin’s value decreasing by more than 17% in just one day.
It is unclear what Elon Musk’s motives are, but this action shows a rapid change in the billionaire’s stance on supporting and opposing Bitcoin. If he thinks Bitcoin is harmful to the environment, then Tesla should not have supported this cryptocurrency from the beginning. It contradicts the automaker’s mission of protecting the environment through clean energy.
The fact that Bitcoin consumes a large amount of energy for mining has been known for a long time, not just recently. Earlier this year, researchers at Cambridge University estimated that Bitcoin consumes 121.36 terawatt-hours annually, more than a country like Argentina.
Not only has Elon Musk flip-flopped from supporting to opposing Bitcoin, but he and Tesla also used Bitcoin to enhance their recent quarterly financial report. By selling about 10% of the Bitcoin held by Tesla, Elon Musk helped the EPS (earnings per share) of Tesla exceed analysts’ expectations, thus pleasing the company’s investors.
The profit from selling Bitcoin was even higher than the profit from selling electric cars at Tesla in Q1/2021. Without it, Tesla’s profit figures would certainly not have met expectations and could have dissatisfied investors.
Meanwhile, Elon Musk justified this action as a way to demonstrate the liquidity of Bitcoin to Tesla’s board. His action also caused the cryptocurrency market to turn red for several days in mid-April.
Source: cointelegraph