The reason Tesla dropped its support for buying vehicles with BTC was because of the company’s concerns about the “rapidly increasing use of fossil fuels, especially coal,” for bitcoin mining and transactions. Sounds reasonable for a company that develops electric cars, doesn’t it?
First, the question of whether BTC is a waste of energy is not new and has been debated by industry experts for some time. Meanwhile, major media outlets – the New York Times, the Financial Times, and Bloomberg, to name a few – made headlines after Musk’s comments, blaming cryptocurrencies for the enormous energy consumption. They referred to the Cambridge University Bitcoin Power Consumption Index, in which the electricity used by Bitcoin miners worldwide is currently around 113 terawatt hours per year. What they didn’t mention – intentionally or not – is that the most recent study by the Cambridge Center for Alternative Finance claimed that 39% of all energy used in BTC mining came from renewable sources.
Interestingly, Galaxy Digital released a report titled “On Bitcoin’s Power Consumption: A Quantitative Approach to a Subjective Question,” in which the company estimates that the traditional finance space’s energy consumption is around 260 terawatt hours per year, more than double that in the bitcoin industry. However, the estimates are only based on available data. So it’s fair to say that the real number is much higher.
Another important note is that after the outbreak of COVID-19 and the huge global shift towards digitization, we need to put the problem of crypto energy consumption in the broader context of internet usage. As noted by Travis Nichols, Media Director of Greenpeace USA
“As web services grow and become more complex, the need for computing power will continue to grow in the years to come, and that will require a lot more energy.”
Likewise, Mark Cuban, a billionaire owner of the Dallas Mavericks, decided not to withdraw his support for paying with Bitcoin, arguing with Elon Musk:
“We know that replacing gold as a store of value helps the environment. […] Reducing the use of big banks and currencies will benefit society and the environment. “
If we get back to Musk’s allegations against Bitcoin, it has had a negative impact on the sector. For example, a bill that focuses on the environment in New York State would put a three-year moratorium on cryptocurrency mining if passed in the state Senate. But everything has a positive side, as they say. The good news is that by paying attention to the carbon footprint of the cryptocurrency industry, it can move space faster towards sustainability, as it did with the global pandemic that forced governments around the world to be in the midst of COVID-19 to work on green energy.
Cointelegraph asked experts in the cryptocurrency and blockchain industry to give their opinion on the following question: How are all of these comments from Elon Musk affecting the entire crypto space?