Elon Musk, Tesla’s CEO, announced in a tweet that Bitcoin vehicle sales have been halted due to climate change concerns. Following the post, bitcoin dropped by more than 10%, and Tesla stock fell as well however, Some environmentalists and investors reacted negatively to Tesla’s announcement in March that it will accept the cryptocurrency.
In February, the electric carmaker announced it had purchased $1.5 billion (£1 billion) worth of the world’s most valuable digital currency. Mr Musk wrote, “We are concerned about the rapidly growing use of fossil fuels for Bitcoin mining and transactions, especially coal, which has the worst emissions of any fuel.”
He also mentioned that the electric carmaker will not sell any of its Bitcoin and that it plans to use it for transactions until mining moves to more environmentally friendly energy sources.
Mr Elon Musk also mentioned that the electric carmaker will not sell any of its Bitcoin and that it plans to use it for transactions until mining transitions to more environmentally friendly energy sources.
According to market analysts, Tesla’s shift is an effort to assuage the fears of investors concerned about climate change and sustainability.
“Environmental, Social, and Corporate Governance (ESG) concerns have become a major motivator for many investors, and Tesla, as a renewable energy-focused organization, may want to function better in the environmental field of ESG,” Burman Invest’s Julia Lee told the Media.
“However, a cynic might argue that this is yet another attempt by Elon Musk to sway the cryptocurrency market, as he has done so many times before,” she continued. Tesla announced profits for the first three months of the year of $438 million, up from $16 million the previous year, thanks to Bitcoin and environmental credits sales.
Mr Musk has been a vocal supporter of cryptocurrencies, often tweeting about Bitcoin and Dogecoin, a once-obscure digital currency. In recent months, his tweets have aided in the growth of Dogecoin, which began as a social media joke and has since grown to become the fourth-largest cryptocurrency in the world.
What are the questions around Bitcoin in the current climate?
Bitcoin is developed by miners who compete against one another to solve complex mathematical puzzles using high-powered computers. It is a high-energy process that frequently relies on electricity produced from fossil fuels, especially coal.
Because of the supremacy of Chinese Bitcoin miners and a lack of incentive to move from cheap fossil fuels to more costly renewable energy sources, there may be few immediate solutions to Bitcoin’s pollution issues. According to recent reports, China is responsible for more than 75% of global Bitcoin mining.
According to the report, the carbon footprint of bitcoin is equivalent to that of one of China’s ten largest cities. That’s because most Bitcoin miners use electricity generated from fossil fuels, mainly coal, for the majority of the year, switching only during the rainy summer months to renewable energy, primarily hydropower.
Bitcoin proponents point out that the traditional financial system, with its millions of employees and machines in air-conditioned offices, consumes a significant amount of energy, which is typically generated from fossil fuels.