Four years have gone by since Tesla made the decision to stop accepting Bitcoin due to environmental concerns. Even though the Bitcoin mining industry has reportedly made strides in increasing its use of renewable energy sources, Tesla does not seem inclined to resume Bitcoin payments anytime soon.
Back on Feb. 8, 2021, Tesla announced a $1.5 billion investment in Bitcoin in a filing with the United States Securities and Exchange Commission (SEC). This move was followed by Tesla CEO Elon Musk’s decision to incorporate the cryptocurrency into the company’s treasury and to start accepting Bitcoin as a form of payment for their electric vehicles.
However, on May 13, 2021, Tesla reversed course and stopped accepting Bitcoin as a payment method. This decision was made in response to concerns about the rising use of fossil fuels, particularly coal, in Bitcoin mining and transactions. Although Tesla stated that they would reconsider Bitcoin payments once the cryptocurrency became more sustainable.
In June 13, 2021, Musk announced that Tesla would only allow Bitcoin transactions when at least 50% of the energy used by miners was clean and showed a positive trend for the future.
Since then, there have been significant changes in the Bitcoin landscape. The industry has witnessed indirect institutional adoption through spot Bitcoin exchange-traded funds (ETFs), acceptance as legal tender, technological advancements in the protocol, and improvements in the usage of renewable energy for crypto mining.
According to data analyzed by climate tech venture capitalist Daniel Batten and data analyst Willy Woo, Bitcoin mining’s sustainable energy usage has reached an all-time high of over 55%. This surge reflects a sustained positive trend since mid-2021.
While the conditions set by Musk seem to have been met, questions remain about whether he and Tesla will uphold their promise and reintroduce Bitcoin payments.
The issue of energy consumption in Bitcoin mining remains a contentious issue. Data analyst Alex de Vries highlighted the lack of transparency and verifiability in energy disclosures by Bitcoin miners. He pointed to regulations like the European Markets in Crypto-Assets Regulation (MiCA) as a way to address this lack of transparency.
De Vries also mentioned the unreliable claims made by some miners regarding their use of renewable energy sources, citing past instances where such claims were disproven. He suggested that Musk’s decision to halt Bitcoin payments may have been influenced by these questionable practices.
In the quest for accurate energy data for Bitcoin mining, researchers like Alexander Neumüller from the Cambridge Centre for Alternative Finance emphasized the importance of rigorous methodologies and data collection. The Cambridge Bitcoin Electricity Consumption Index (CBECI) was developed to estimate Bitcoin electricity consumption based on various data points.
The debate over the energy mix used by miners continues, with coal remaining a significant source but with a notable increase in renewable energy usage. The Bitcoin Mining Council (BMC) has also provided insights into sustainable electricity usage among miners in North America.
The changing landscape of Bitcoin mining, driven by regulatory changes like China’s restrictions on coal-based mining, has led to a shift in mining activity to other regions like the U.S. Neumüller noted the impact of this shift on the industry’s electricity mix estimate.
Regulatory uncertainty remains a key factor in the future of Bitcoin mining, with implications for renewable energy use. However, the potential for miners to leverage wasted energy from renewable sources offers a promising avenue for sustainable growth.
The decision on whether Tesla will resume Bitcoin payments ultimately rests with Elon Musk. Despite the controversy surrounding Bitcoin’s environmental impact, Musk’s commitment to environmental sustainability may influence his decision. The outcome remains uncertain, with potential repercussions from stakeholders and regulatory bodies.
As the debate continues, Tesla’s stance on Bitcoin payments remains unclear, leaving observers to speculate on the company’s next move.