$425bn Wiped Off Crypto Market As Musk Says Bitcoin Is Bad For The Environment
Elon Musk has released a statement saying Tesla will no longer accept Bitcoin as payment for its electric vehicles. The firm said the decision was based on the increasing use of coal in Bitcoin mining.
“We are concerned about rapidly increasing use of fossil fuels for Bitcoin mining and transactions, especially coal, which has the worst emmissions of any fuel.”
This coincided with a sharp decline in the total crypto market cap, which saw $425bn wiped from valuations before bottoming at $2.06 trillion in the early hours (UTC). Bitcoin is down 10.5% in the last 24-hours.
The timing and overall message have drawn confusion, leading to calls to publicize the source, which claims increasing coal usage in BTC mining.
In turn, some have called this hypocritical, as mining rare earth metals, in the production of lithium-ion batteries has a hugely damaging impact on the environment.
The Bitcoin Energy Myth Was Disproven Already
Tesla’s $1.5 billion Bitcoin purchase in February was a massive boost for the cryptocurrency industry. The firm also announced it would later begin accepting BTC as payment for its vehicles, which it implemented a month or so later.
Although accepting BTC for Tesla came with several issues, for example, tax implications, the move was still seen as a step forward in cryptocurrency adoption.
Based on environmental concerns, Tesla has now withdrawn the option to buy using Bitcoin. They went on to say they won’t be selling any Bitcoin and intend to use it once a greener source of energy is implemented.
Interestingly, the firm also revealed it was looking at other, less intensive cryptocurrencies. Whether that’s for a payment option or treasury asset is unknown at this time.
“Tesla will not be selling any Bitcoin and we intend to use it transactions as soon as mining transitions to more sustainable energy. We are also looking at other cryptocurrencies that use <1% of Bitcoin’s energy/transaction.”
In response, Bitcoin-bull Anthony Pompliano pointed out that the majority of miners use renewable energy.
“Elon … you realize that 75% of miners use renewable energy, right? This energy story has been debunked over and over again.“
The reason for this is simple economics. Hydroelectric power is the cheapest source of electricity, and cost-conscious miners tend to flock to whichever location can offer cheap electricity.
Lithium-Ion Batteries Are Harmful To The Environment
Tailpipe emissions from electric cars indeed are zero. However, the environmental impact of electric vehicles is felt further up the chain.
In an article titled, “Lithium Batteries’ Dirty Secret: Manufacturing Them Leaves Massive Carbon Footprint,” the authors claim that making lithium-ion batteries could emit 74% more CO2 than making a standard combustion car.
As well as that, there is the destruction and contamination of natural water systems that come from mining earth metals, not forgetting the resulting displacement of indigenous people.
The Head of the Asia Research Division of the German think tank SWP, Günther Hilpert, said the mining for rare earth elements is a highly damaging and wasteful activity.
“Securing just one ton of rare earth elements produces 2,000 tons of toxic waste, and has devastated large regions of China.”
Bitcoin does have an environment through high energy consumption. However, most miners are using renewable sources. At the same time, manufacturing EVs is not saving the planet.
Source: BTCUSD on TradingView.com