Published: 14th May 2021
What the FAQ: How does Bitcoin mining impact the environment? Why did Tesla stop using it?
Cryptocurrency giant Bitcoin’s values plummeted following a statement from Elon Musk about its impact on the environment. Here’s why users are thinking twice about it
On May 13, cryptocurrency Bitcoin’s values plunged to $50,000. While the numbers were already down, the 17 per cent fall was followed by a tweet by Elon Musk, the founder of Tesla. The first entirely digital currency to be introduced by an anonymous group or individual called Satoshi Nakamoto in 2009, its rates have always been volatile. But the recent announcement from Tesla has got users rethinking their choices and even helped other cryptocurrencies turn a larger profit. Here’s why.
Why did Tesla discontinue their use of Bitcoin?
In a tweet that was simply titled Tesla & Bitcoin, Tesla founder Elon Musk wrote, "Tesla has suspended vehicle purchases using Bitcoin. We are concerned about rapidly increasing the 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."
What does this mean?
Musk went on to say that Tesla will not be selling any Bitcoin and that they intend to use it for mining transactions as soon as the mining process transitions into using more sustainable energy. He also mentioned that they were exploring other transactions that use less than 1 per cent of the energy that Bitcoin uses. Following this, cryptocurrencies like Dogecoin reported major profits.
How does Bitcoin mining harm the environment?
Mining is a process through which a new coin is created with the help of computers by solving complex mathematical algorithms. Based on a decentralised network called Blockchain, the mining software takes around 10 minutes to do this and to process a block. This stage of processing utilises a large amount of electricity. Miners use giant, energy-consuming systems to verify their transactions. Since this electricity is usually derived from fossil fuels, a rise in Bitcoin production usually leads to a massive spike in energy consumption as well.