Published
3 years ago on
March 29, 2021
In recent news, we’ve covered reports that confirm how prospective buyers of Tesla’s electric vehicles (EV) can now purchase with Bitcoin, straight from Tesla’s website.
It could be a great move to pour in more Bitcoin into Tesla’s balance sheet, and a way of driving its own positions with the alpha cryptocurrency after its $1.5 billion purchase in February.
Having been known as an industry mover for the electric vehicles segment, Tesla’s commitment to ecological balance and carbon footprint reduction may be at stake with this recent move. Why? It’s something clear: the production and mining of Bitcoin, and all other cryptocurrencies, for that matter, requires huge amounts of electricity, which, in turn, impacts the environment.
According to data from the Cambridge Bitcoin Electricity Consumption Index (CBECI), if we were to consider Bitcoin mining as a country on the world index, it ranks 27th in terms of consumption. Compared to China, which ranks first, Bitcoin consumes some 139.1 TWh (Terawatts hours). China guzzles up 6453 Twh, while the US, which comes to a close second, consumes 3989 TWh.
See this data visualization from CBECI, based on data from IEA (International Energy Agency), for reference.
At its core, Bitcoin is energy intensive, primarily because by design, through the Proof of Work algorithm, it needs to verify and close out transactions through blocks. Currently, 65% of all Bitcoin mining processes are done in China, where electricity is cheap, despite being primarily generated by coal power plants.
In a recent report, the Bank of America has stated that “Looked at differently, a single Bitcoin purchase at a price of ~$50,000 has a carbon footprint of 270 tons, the equivalent of 60 ICE (internal combustion engine) cars."
Enter Tesla’s promise of reducing carbon impact and greenhouse gas footprint on a per-product basis. Tesla claims that through its electric vehicles, it aims to “accelerate the world’s transition to sustainable energy.” This is true, except for the fact that by accepting Bitcoin, the company indirectly runs counter to its mission.
The contention here is that: why just Bitcoin? Ethereum, for example, currently consumes some 30 TWh on average, a 128% difference. Other DApps and cryptocurrencies are even more electricity efficient than Ethereum itself, as more efficient consensus algorithms being developed as full Web3 integration approaches.
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