$10,000 red candles appear less shocking the second time around. And although Bitcoin is on its way to recovery following a near-instant crash to $45,000, the culprit remains the center of attention: Elon Musk, who sent waves of shock, confusion, and outrage through the wider Bitcoin space when he announced on Wednesday that Tesla would no longer accept bitcoin for payments on its store.
Yet not the removal of Bitcoin payments itself, but the reason for the move is what has caused discussion among Tesla and Bitcoin supporters. “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,” Musk wrote on Twitter.
Notably, Tesla apparently has no plans to sell any more of its current bitcoin holdings. However, the car manufacturer is looking into cryptocurrencies that use less than one percent of Bitcoin’s energy per transaction, according to Musk.
The Tweet has caused major backlash against the Tesla chief and his firm, with a growing number of Twitter users disclosing their cancellations of Tesla orders or announcing they would boycott Tesla products.
Many have shared their disapproval of Tesla’s justification, for a number of reasons.
Some Question Tesla’s Due Diligence
In fact, the announcement comes rather unexpected, as Tesla only began accepting bitcoin in March.
“I refuse to believe that one of the smartest people on earth — @elonmusk — JUST realized Bitcoin uses electricity,” finance YouTuber Andrei Jikh Tweeted.
Since Tesla began accepting bitcoin less than two months ago, the wider Bitcoin mining landscape has experienced no drastic changes that would explain environmental concerns based on new information the firm did not have access to two months ago. Many have pointed towards a comment Musk posted in response to a Tweet by Jack Dorsey in April, in which the Twitter CEO wrote that “Bitcoin incentivizes renewable energy.”
With no apparent explanation for the change of mind, some Twitter users have speculated whether Musk is behind the decision, or whether the move is the result of external pressure from Tesla’s board or even government interference. The Investor’s Podcast host Preston Pysh wrote in a response to Musk, “did someone get yelled at by the government who pays you massive subsidies so you can stay in business each quarter?”
Others believe Musk may be out for some cheap bitcoin:
It is unclear and unproven whether the Tesla CEO is looking to manipulate the market. Yet this is not the first time Musk has come under fire for his public statements; many have accused him of directly influencing market activity around the self-proclaimed memecoin Doge, which Musk has been heavily promoting.
A Misinformed Bitcoin Take?
With his Tweet, the Tesla CEO picked up a conversation that has seen periodic revivals over the past few years. The discussion around Bitcoin’s carbon footprint has easily caused the majority of criticism surrounding the asset in its latest bull market, and while many appreciate the environmental awareness, they believe Musk’s take on Bitcoin’s climate impact is based on misconstrued information.
Much of the criticism was also directed at Musk’s inaccurate description of Bitcoin’s energy use per transaction. MicroStrategy CEO Michael Saylor wrote in a response, “ironic because no incremental energy is used in a #bitcoin transaction.”
Saylor further noted that on the grand scale of things, Bitcoin’s “net impact on fossil fuel consumption over time will be negative.”
The energy consumed by the Bitcoin network is used to secure a trillion dollars in value. The discussion of whether this is a justified allocation of energy continues to divide opinions.
A popular counter argument that many bitcoiners have pointed out in response to Musk’s announcement is that of the hypocrisy in blaming Bitcoin’s use of energy while ignoring that of precious metals like gold or the fiat monetary system — which dwarfs Bitcoin’s energy consumption.
In addition, many take issue with Musk’s portrayal of Bitcoin mining as a major consumer of fossil fuels and have noted the large number of miners that power their operations with renewable energy, often even using surplus energy to convert otherwise wasted energy into monetary value.
Blockstream CSO Samson Mow linked to an April report published by Dorsey-led Square, which outlines Bitcoin’s potential to fuel clean energy with its very ability to solve intermittency and congestion problems associated with renewable energy production. Blockstream itself operates large-scale Bitcoin mining facilities that utilize hydropower.
The environmental argument against Bitcoin mining often builds on the premise that many miners are located in China, a major producer of coal-based energy. Yet it is difficult to pinpoint just how many miners actually power their machines with coal. In fact, many use excess energy generated by hydropower plants in the Sichuan region.
All Part of a Plan?
While Musk’s Tweet has shaken Bitcoin on its upward trajectory, his wording points toward a temporary suspension until Tesla is confident in Bitcoin’s energy sources. If or when that will be the case is unclear. In the hours following the announcement, a very specific take has further come to light: that of an ulterior motive.
All speculation around the news that took Bitcoin holders through yet another $10,000 dip currently remains just that: speculation. At press time, Bitcoin has recovered to close to $51,000.