Bitcoin: Tesla’s headlong rush into the cryptocurrency

Categories: Cryptocurrencies, NewsBy Published On: July 26, 20210 Comments

Tesla CEO Elon Musk has suggested that the electric car maker could position itself favorably once again on the world’s leading cryptocurrency if it can reduce its carbon footprint.

After starting to accept payments in bitcoin for the purchase of its electric cars and then abruptly doing an about-face, Tesla could once again accept settlements with the world’s leading cryptocurrency.

Elon Musk, chief executive of the California-based automaker, said at the B-Word conference on Wednesday, July 21, 2021, that Tesla would “probably” reposition itself in favor of bitcoin again if its production via proof of work used at least 50 percent renewable energy, Reuters reported. The entrepreneur would also like to see more efforts put in place to increase that rate.

While it is difficult to measure and remains widely debated, bitcoin’s carbon footprint is one of its main criticisms. According to Digiconomist’s energy consumption index, for example, this carbon footprint, now at 64.18 megatons of CO2 per year, is equivalent to that of two countries like Serbia and Montenegro. It should be noted, however, that these figures should be taken with a grain of salt, as the methodology used is also criticized.

Elon Musk, whose strong support earlier this year for bitcoin had largely contributed to driving up its value (Tesla subsequently sold about 10% of its assets acquired a few months earlier), had himself suddenly become concerned in May about the environmental impact of mining the crypto. “We are concerned about the increasing use of carbon-rich fuels to mine bitcoin, especially coal, which has the worst [greenhouse gas] emissions of any fuel,” he said in the spring. Just three months earlier, Tesla announced a $1.5 billion investment in bitcoin. According to Bitcointreasuries, Tesla currently holds 43,200 bitcoins worth $1.4 billion.

“I might inflate, but I’m not dump.”

For many observers, it’s hard to believe that neither Elon Musk nor the entire Telsa board was unaware of the environmental impact of bitcoin mining prior to their massive investment in the cryptocurrency. This may suggest that the months of support by Elon Musk were intended to create a virtuous circle for Tesla and its entry into bitcoin – a process some would call pump & dump.

Elon Musk, who also personally owns cryptocurrencies (bitcoin, ethereum and dogecoins), however, seemed to want to anticipate further criticism on Wednesday, July 21. I don’t believe at all in driving up prices, then selling. I’d like to see bitcoin flourish.”

Recall that after reaching a record high price of almost $65,000 in mid-April 2021, growing other cryptocurrencies in its wake, bitcoin fell sharply due to a combination of factors. On Thursday, July 22, 2021, its price was at just over $32,000.

For ethereum, things are different. The cryptocurrency does not currently practice the coin burn, but the deployment of the Ethereum Improvment Proposal 1559 on August 4, 2021 will change things. For each future interaction on the blockchain, ETH will be destroyed, says the specialized site Decrypt. For now, for each transaction on the blockchain, a gas fee (fuel costs) that can reach very large sums is levied by miners. The deployment will allow to put a fixed gas fee on the blockchain, and to reduce the number of ETH available, which should please the investors according to Decrypt.

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