Tesla’s $1.5 billion bitcoin purchase clashes with its environmental aspirations

Tesla’s $1.5 billion bitcoin purchase clashes with its environmental aspirations

 

Tesla just gave bitcoin a big boost that’s likely to result in more greenhouse gas emissions from the energy-hungry cryptocurrency.

 

After Tesla purchased $1.5 billion in bitcoin and announced that it will accept bitcoin as payment in the future; the price of bitcoin reached an all-time high.

 

“It’s hard to imagine, frankly a more credible endorsement than one coming from folks like Elon [Musk] who are inventing the future;” says Garrick Hileman, head of research at crypto asset company blockchain.com and visiting fellow at the London School of Economics.

 

When prices are high, bitcoin “mining” — creating new coins by verifying transactions — ramps up. But even though that mining happens virtually; it results in greenhouse gas emissions that fuel a climate crisis in the real world.

 

That’s at odds with Tesla’s mission to “accelerate the world’s transition to sustainable energy.” With its embrace of bitcoin; it’s accelerating the rise of a cryptocurrency that gobbles up energy pretty unsustainably, or at least inefficiently, by design.

 

ALSO READ: Bitcoin reaches new high after Tesla invests $1.5 billion

 

 

Bitcoin was created to eliminate the need for a third party, like a bank, to oversee financial transactions. But without a bank’s security systems; bitcoin records are kept safe and accurate by requiring miners to solve ultra-complex numeric problems.

 

Miners need energy-hungry machines to solve those problems, which is what drives the climate pollution associated with bitcoin.

 

It’s a system called “proof of work” that’s deliberately difficult in order to dissuade people from trying to take over or corrupt the records.

 

It also gets expensive to mine bitcoin because of the cost of the machines and all of the energy they guzzle.

 

“It should be more profitable to play by the rules than to cheat, that’s really the entire idea behind all of this,” says Michel Rauchs; a research affiliate at the Cambridge Centre for Alternative Finance. “And the only way you can do that in a trustful way online is by burning electricity; through those computing puzzles.”

 

If bitcoin were a country, its annual electricity consumption would rank 30th in the world.

 

It would use just under the amount of energy Norway consumes and slightly more than Argentina, according to the Cambridge Centre for Alternative Finance; which keeps an updated estimate of bitcoin’s energy consumption.

 

Bitcoin’s energy consumption has risen steadily since October as the price of bitcoin spiked.

 

That bubble could burst, but Tesla’s bid on bitcoin has given the price of bitcoin — and its carbon dioxide emissions — an added lift.

About The Author

Osigweh Lilian Oluchi is a graduate of the University of Lagos where she obtained a B.A (Hons) in English, Masters in Public and International affairs (MPIA). Currently works with 1stnews as a Database Manager / Writer. [email protected]

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