Tesla will most likely accept bitcoin again as payment when the mining rate for cryptocurrency reaches 50% renewables. This was stated Wednesday by CEO Elon Musk at a virtual panel discussion hosted on Wednesday by the Crypto Council for Innovation. These remarks are similar to statements he made last week on Twitter.
Tesla began accepting bitcoin payments in February. This was the same month that it purchased $1.5 billion worth of bitcoin. The company then renounced its decision three months later citing environmental concerns.
Because cryptocurrencies use a lot of energy, they are often given a bad reputation. The two largest currencies in the space, Ethereum and Bitcoin, use proof-of work to power their networks, and create new currency blocks. Miners solve complex cryptographic problems by stringing together high-end GPUs. Many GPUs are available at major mining sites around the clock.
Ethereum has committed to moving away from proof of work to something called proof-of stake, which greatly reduces energy consumption. Bitcoin, however, seems less likely to make that transition. Being ‘ecofriendly’ doesn’t necessarily mean that Bitcoin will be made more efficient, but rather that it will shift the energy sources used to power its mining centers.
Although Bitcoin’s global mining network clearly favors renewables, it is difficult to determine exactly how widespread renewables usage is due to the grid’s decentralized nature. It’s clear that Musk won’t be able to use the current or future ‘ecofriendliness’ of Bitcoin without unprecedented transparency from the global network. However, he will likely have plenty of data to base his decision on.
It’s not surprising that he made these comments today. In June, he tweeted, “When there’s confirmation for reasonable (50%) energy usage by miners of positive future trend,” stating that Tesla would resume accepting Bitcoin transactions.
However, his comments give him plenty to work with. He said that Tesla could support the shift to renewables as long as there was a conscious effort to make bitcoin miners more environmentally-friendly. A large amount of bitcoin mining was done from China where there was cheap coal and hydropower, making it more economically. However, Musk pointed out that some of these coal plants had been closed down, and that many Chinese miners have begun to migrate to other countries in response to Chinese mining restrictions.
His concerns about bitcoin’s impact on the environment have been controversial in the bitcoin community. Some argue that bitcoin is subject to too much scrutiny relative to its actual energy consumption. Twitter CEO Jack Dorsey, who also participated in the virtual panel, has actually argued that bitcoin can incentivize the transition to renewable energy. A white paper published by the Bitcoin Clean Energy Initiative, a program created by Square, argues that bitcoin mining could make renewables even cheaper and more economically feasible than they are today.
Musk’s statements, however ambiguous, show that he still has considerable control over the cryptocurrency markets. After hitting an April record high of $63,000, the Bitcoin price dropped to $30,000 Monday. The price recovered after the billionaire founder shared more information about his holdings and those of his companies at the virtual panel.
His personal bitcoin holdings as well as Tesla’s bitcoin holdings are not the only ones Musk has. SpaceX, his aerospace company, also owns bitcoin. Musk also stated that he owns ether, and (of course), dogecoin. After Musk’s comments, the price of all three cryptocurrencies rose.