Key Highlights:
- Tesla announced suspension of purchases via Bitcoin due to climate change concerns
- Musk’s tweet resulted in a wipe of about $365.85 billion off the entire crypto market
- Musk clarified those transactions might be resumed “as soon as mining transitions to more sustainable energy”
Investment in Crypto Using Sustainable Energy
Major organizations and companies are using cryptocurrencies as a hassle-free mode of transaction. Over 6,700 cryptocurrencies are traded regularly and the figures increase everyday due to the support of technology. As of 13 April 2021, the total value of all cryptocurrencies was more than $2.2 trillion. Amongst that, the value of Bitcoin alone amounted $ 1.2 trillion. The value of the cryptocurrencies keep fluctuating, due to factors like trades, trading, buyers, etc.
Tesla CEO announced that it will suspend it purchasings due to climate concerns. This resulted in a 17% drop of it’s value.
Tesla and Bitcoin
Musk stated concerns about the increasing use of fossil fuels for Bitcoin minings and transactions. With respect to that, he stated that Tesla will be suspending all future transactions using it.
“Tesla has suspended vehicle purchases using it. We are concerned about the rapidly increasing use of fossil fuels for bitcoin mining and transactions, especially coal, which has the worst emissions of any fuel. Cryptocurrency is a good idea on many levels and we believe it has a promising future, but this cannot come at great cost to the environment,” Musk quoted on Twitter.
He further added that Tesla will not sell any of the Bitcoin that it holds. Musk clarified that Tesla might use it again “as soon as mining transitions to more sustainable energy.” Musk added that during the meantime, Tesla is looking forward to investing in other cryptocurrencies that use less energy than Bitcoin.
In February 2021, Tesla announced in a regulatory filing that it had purchased Bitcoin worth $1.5 billion and planned to accept payments in Bitcoin. The announcement confirmed Bitcoin’s authentication as a mode of payment.
Bitcoin’s Value Plunge
Bitcoin is regarded as the world’s largest cryptocurrency. The currency was used by traders and marketers in 2009 and its value keeps fluctuating with time. It’s value dropped as much as by 17% after Musk’s tweet regarding Tesla’s payment halt. According to data from Coinmarketcap, the value of the entire crypto market pitched at around $2.43 trillion when Musk made the Twitter announcement. After Elon Musk’s tweet, the cryptocurrency market witnessed a loss of $165.75 billion. The market capitalization dropped to $2.06 trillion, amounting a total wipe off of $365.85 billion.
Bitcoin Mines
Bitcoin mining consumes 66 times more electricity than it used to back in 2015. A study in 2020 estimated bitcoin mining used 7.46 GW of electricity on average. The same study puts the number right now at 16.71 GW, representing 147.79 TWh on an annual basis. The carbon emissions caused by Bitcoin storage and computing are likely to face scrutiny, according to the latest Citigroup Inc. Report.
The bitcoin dominance index, a ratio of it’s market cap to the total market cap of all cryptocurrencies, stooped further to 42. This accounted as the lowest level since June 2018.
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