Tesla has just suspended vehicle purchases using Bitcoin due to its increasing use of fossil fuels, but how does Bitcoin mining use fossil fuels?
On many occasions, Tesla founder Elon Musk has publicly supported Bitcoin.
He often tweets about the popular cryptocurrency, and in February 2021, Tesla even bought $1.5 billion in Bitcoin and planned to start accepting it as payment from customers.
However, just months later, he has now announced that Tesla will no longer accept Bitcoin over climate concerns and use of fossil fuels for ‘Bitcoin mining’.
What is Bitcoin mining? And how does it use fossil fuels?
What is ‘Bitcoin mining’
Put simply, ‘Bitcoin mining’ is a term used to describe the making of new Bitcoins.
There is no actual physical mining involved, it’s a process that requires a series of very technical mathematical puzzles.
These are done by very high-powered computers, which is where fossil fuels come in.
How does Bitcoin mining use fossil fuels?
The process of creating Bitcoins is so complex that it has to be done by incredibly high-powered computers.
It’s very highly energy-intensive, and therefore uses a lot of electricity, which is created using fossil fuels.
One of the main ways we produce electricity is through burning coal, which is a fossil fuel. However, this releases carbon dioxide into the environment and increases global warming.
The Centre for Alternative Finance found that Bitcoin now represents roughly 0.59% of global electricity production.
This means that huge amounts of fossil fuels are having to be burnt to produce enough electricity to power the Bitcoin transactions that are happening around the world every second.
The only way for Bitcoin to continue sustainably would be to use renewable energy sources, such as wind or solar power, to make electricity, rather than burning fossil fuels.
Elon Musk stops Tesla purchases using Bitcoin over climate concerns
On Wednesday (May 12th), Elon Musk tweeted a statement regarding “Tesla & Bitcoin”.
He announced that Tesla would no longer accept Bitcoin as a form of payment due to the rapidly increasing amount of fossil fuels it uses.
“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,” he said.
He then said that “Cryptocurrency is a good idea on many levels” and has a “promising future” but argued that it 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,” he concluded.
He also said that Tesla is looking for other cryptocurrencies that use “<1%” of Bitcoin’s energy and transaction.