Elon Musk’s u-turn decision to stop accepting bitcoin as payment over environmental concerns has been well-received by some of Tesla Inc’s investors, offering a warning to corporate peers mulling a dabble with the cryptocurrency.
Bitcoin recently suffered a huge dent in its rally after Musk stepped up his criticism of the currency as environmentally unsustainable.
The Tesla boss’ tweets, which had helped drive some of the gains in bitcoin in recent months, this week triggered a 17% slide in the value of the cryptocurrency when he said his company’s customers would no longer be able to use bitcoin to buy its cars.
He said in a tweet Thursday he worries about “massive use” of coal and other carbon-intensive energy to generate the electricity needed to mine digital currency.
Bitcoin is down about 13% this week and was last up 1.6% at $50,503. It has slumped over a fifth from its record of just under $65,000 hit last month. On the other hand, he signalled his support for Dogecoin.
Driving the decision, Musk said, was concern over the amount of energy it takes to “mine” bitcoin, with much of it done in China using cheap, climate-destroying thermal coal. Tesla could revisit the decision if the situation changes, he added.
Bitcoin is created when high-powered computers compete against other machines to solve complex mathematical puzzles, an energy-intensive process.
Bitcoin mining uses about the same amount of energy annually as the Netherlands did in 2019, data from the University of Cambridge and the International Energy Agency showed, generating between 22 million and 22.9 million metric tons of carbon dioxide emissions a year, according to a 2019 study in scientific journal Joule.
Tesla Cryptocurrency – Only If
Dogecoin consumes 0.12-kilowatt hours of electricity per transaction compared with 707 for bitcoin, according to data centre provider TRG. The token, whose logo features a Shiba Inu dog, has surged this year to become the fourth-largest cryptocurrency with a total value of $68 billion, according to CoinMarketCap.
In an exchange, the user asked why is the Tesla CEO not creating his own cryptocurrency that matches all his requirements.
“Why not just make a crypto from scratch that does everything you want technically and has a lot of dev support and doesn’t have high concentration of ownership at least initially? (sic)” Musk was asked.
To this, he replied: “Only if Doge can’t do it. Big pain in the neck to create another one.”
Few major companies accept Dogecoin for payment, and its supply is unlimited.