There’s been a swift reverse by Tesla since we reported on Tesla’s interest in Dogecoin and accepting Bitcoin. Tesla’s Technoking, Elon Musk took to Twitter yesterday to release a statement on its involvement with Bitcoin.
Tesla has suspended vehicle purchases using Bitcoin. We are concerned about rapidly increasing use of fossil fuels for Bitcoin mining and transactions, especially coal, which has the worst emissions of any fuel.
Cryptocurrency is a good idea on many levels and we believe it has a promising future, but this cannot come at great cost to the environment.
Tesla will not be selling any Bitcoin and we intend to use it for transactions as soon as mining transitions to more sustainable energy. We are also looking at other cryptocurrencies that use <1% of Bitcoin’s energy/transaction.
Tesla has always been lauded for its efforts to accelerate the world’s transition to sustainable energy. The US auto manufacturer has always stated that the faster the world stops relying on fossil fuels and moves towards a zero-emission future, the better.
Although Musk caused unease among environmentalists earlier this year by endorsing Bitcoin, whose annual carbon emissions are equivalent to that of a small country, he has now withdrawn this position. Musk released the Tesla statement after a tweet from the Cambridge Centre for Alternative Finance called Bitcoin’s energy usage “insane”.
And because Musk has been a heavy influence recently on cryptocurrency, values plunged overnight after Tesla said it would no longer accept Bitcoin for vehicle purchases. However, Bitcoin rebounded to recover half its losses. In the meantime, Tesla’s stock took a bit of a dip.
The heavy energy use of Bitcoin has long been a criticism of the digital asset. Bitcoin is reliant on energy-intensive mining units and has come under fire from environmental groups even with its price surging to all-time highs recently.
Musk added that Tesla intends to use Bitcoin for transactions as soon as mining transitions to more sustainable energy. Studies show that Bitcoin currently consumes around 110 Terawatt hours annually, which is equivalent to 0.55% of global electricity production. That's about the annual energy draw of small countries like Sweden.
Tesla's first-quarter earnings report recorded proceeds from sales of digital assets of $272 million and net digital assets of $1.33 billion. Tesla bought $1.5 billion in Bitcoin in February. Over the past few months, Musk has been promoting cryptocurrency and a single comment from him about Bitcoin or Dogecoin, sends values in a tizz.
Tesla stock fell 3% to close at 571.69 on the stock market on Thursday, breaking below its 200-day line. Shares have dropped 15% so far this week. Tesla wasn’t the only electric vehicle manufacturer to see a drop in its shares. China-based EV rivals Nio fell 7.3%, while Xpeng lost 5% and Li Auto declined 3%.
Tesla has disrupted the auto industry’s reliance on combustion engines and the US-based company isn’t just looking to move a part of the transportation industry, but the entire transportation and energy ecosystem. Tesla provides both businesses and homeowners an opportunity to generate solar energy through solar panels and store them in a Powerwall battery. Tesla also claims to be seeking to extend its battery life and ensure they are recycled responsibly. The carmaker has also opened up its patents, which is a daring move in an industry that works hard to protect its intellectual capital to capitalize on R&D investments.
Although the sudden freeze of Tesla’s bitcoin payments hands a decisive win to Bitcoin’s energy critics, it does not spell doom for Tesla’s remaining bitcoin investment nor its crypto experiment. If Bitcoin mining can decrease its energy use, then Tesla will more than likely get back on board.