It has been four years since Tesla stopped taking Bitcoin over environmental concerns. Elon Musk used to be very friendly towards Bitcoin, even investing $1.5 billion in it and allowing people to buy Tesla cars with Bitcoin. But then, in May 2021, Tesla stopped accepting Bitcoin payments. Why? Well, Musk was worried about the rising use of fossil fuels—especially coal—for Bitcoin mining.
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He had promised to reconsider using Bitcoin when it was more sustainable. He had called for a minimum of 50% of the energies consumed by Bitcoin miners to emanate from clean sources. Well, fast forward to the present, when all that could have changed. Reports indicate that over 55% of the energy used in Bitcoin mining is now made up of renewable sources. That's good, but does it mean Tesla will resume accepting Bitcoin?
Things are not as simple. While the use of renewable energy in Bitcoin mining has increased, the data surrounding this aspect is disputed. There is no transparency or verifiability attached to the energy-related disclosures carried out by Bitcoin miners, experts say.
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For example, data analyst Alex de Vries commented that many miners make bold claims about using renewable energy, which are hard to prove. He equated this process to the misleading research conducted by the tobacco industry during the mid-20th century on smoking and cancer. Moreover, there is a significant role for regulations in this debate. The European Markets in Crypto-Assets Regulation installs MiCA and obliges crypto firms to make rigorous and verifiable disclosures. This implies that Bitcoin miners will be called upon to provide more transparent disaggregation of their energy use, which might show the inflated nature of some sustainability efforts.
Another point that has to be considered is how the changing regulatory landscape is going to affect Bitcoin mining.
This used to host a significant fraction of the world's Bitcoin mining when China banned coal-based mining, and it caused a massive shift. Miners after that shifted towards countries with a greater utilization of renewable energy, like the United States. This shift helped increase the overall use of renewable energy in Bitcoin mining. However, prevailing regulatory uncertainty in the U.S. may dampen these trends.
Among these complications, there is hope. The use of renewable energy in Bitcoin mining has indeed increased, which is a good step. Countries with excess renewable energy, like Paraguay and Ethiopia are drawing miners. Such nations can offer cheap, clean energy, perfect for Bitcoin mining.
It is in the character of Elon Musk to make bold decisions and not shy away from controversy if he is convinced about something.
However, for Tesla to resume accepting bitcoins, the business needs to tread a skinny tightrope. The brand boasts its environmentally friendly stance, and that somehow comes at variance with what Bitcoin has been accused of in the past in terms of high energy consumption. Even today, with renewable energy sources, some people imagine the mining of Bitcoin as being wasteful. Of course, if Tesla does decide to take up Bitcoin once more, then it would indeed require solid, verifiable data to support the decision. Entirely ready for another probable backlash, particularly from environmentalists, Musk and Tesla will need to prove that Bitcoin mining is not as dirty to the environment as it was some time ago.