Tesla and Bitcoin
One month ago Tesla purchased a massive 1.5 billion USD worth of Bitcoin. Tesla claimed that the Bitcoin purchase was meant to allow "more flexibility to further diversify and maximize returns on our cash." (Source 1). Tesla also announced it would be accepting bitcoin as payment initially on a limited basis, this would make Tesla the first major automaker to do so (Source 1). This may be a wise decision, considering that Bitcoin has risen from its 2010 price of around $0.10 to recently more than $50,000 per Bitcoin. Tesla's investors were warned of Bitcoin's volatile nature, but it seems to be doing well so far since Tesla had $1 billion USD in profits last month from its investment in Bitcoin (Source 2).
A maintained price of Bitcoin can be found here: https://www.coinbase.com/price/bitcoin
Criticism over the Bitcoin Purchase
Critics claim that Tesla's Bitcoin purchase clashes with Tesla's hope to create a world that focuses on using sustainable energy.
Bitcoin mining causes greenhouse gases to be produced and this invokes the climate-conscious to be concerned. Concerns over Bitcoin's energy usage have also arisen, since if Bitcoin were a country it would rank 30th in energy consumption (Source 3). Bitcoin's energy consumption has steadily risen, along with its price, since October (Source 3). Some have overpredicted Bitcoin's energy usage, as a 2017 study predicted that Bitcoin would consume all of the world's energy by 2020 (Source 7). You can access a sustained estimation of Bitcoin's energy consumption here https://cbeci.org/. Tesla driving Bitcoin's price higher and Tesla's publicity both can lead to an increase in Bitcoin mining. The higher the price of Bitcoin is, the more lucrative mining Bitcoin becomes. The majority of Bitcoin mining occurs in China and the United States (Source 4).
Tesla's Bitcoin purchase would be part of the companies indirect emissions and these also come from pollution along its supply chain and the usage of Tesla-related products (Source 3). You can find more information about Tesla's environmental impact here https://www.tesla.com/ns_videos/tesla-impact-report-2019.pdf, unfortunately, figures for indirect emissions are not included in Tesla's 2019 report https://www.tesla.com/ns_videos/2019-tesla-impact-report.pdf. Mining locations for Bitcoin tend to target cheap electricity and this does not discriminate between renewable or environmentally unfriendly sources (Source 6). Emissions from Bitcoin-connected activities total between 53 and 127 million megatons of carbon dioxide and this figure would make Bitcoin the 6th highest emitting country on Earth (Source 4). Bitcoin-connotated carbon dioxide production is more than the emission of 4 million gas-powered cars (Source 5). Many proclaim that Tesla's support of Bitcoin goes against their climate-friendly goals and values due to these figures.
Tesla's Response
Elon Musk, CEO of Tesla, has offered $100 million dollars for the best carbon capture technology. This may help offset those concerned about Tesla's Bitcoin purchase.
Elon Musk states that Tesla buying Bitcoin is not necessarily reflective of his own opinion, but is worth the test. He even sees Bitcoin as a more sensible currency than cash.
Some have argued that the entrance of large companies into the Crypto World will boost incentives for using renewable energy (Source 8). There has been no direct response from Tesla to its critics, yet it seems that Tesla has not had any major defocus on striving to make the world a greener place.
Source 1 - https://www.cnbc.com/2021/02/08/tesla-buys-1point5-billion-in-bitcoin.html
Source 2 - https://www.cnbc.com/2021/02/22/tesla-has-made-1-billion-profit-on-its-bitcoin-investment-analyst.html#:~:text=Menu-,Tesla%20has%20made%20about%20%241%20billion%20in,its%20bitcoin%20investment%2C%20analyst%20estimates&text=Tesla%20has%20made%20roughly%20%241,analyst%20at%20Wedbush%20Securities%20estimated.
Source 3 - https://www.theverge.com/2021/2/9/22275243/teslas-bitcoin-purchase-clashes-climate-change-mission
Source 4 - https://www.washingtonpost.com/opinions/2021/02/18/bitcoin-emissions-pollution-tesla/
Source 5 - https://www.latimes.com/business/story/2021-02-08/tesla-invests-in-bitcoin
Source 7 - https://www.newsweek.com/bitcoin-mining-track-consume-worlds-energy-2020-744036
Source 8 - https://www.autoblog.com/2021/02/13/musk-bitcoin-energy-use/
Very interesting your post, I had no idea that bitcoin mining had this impact on the environment, I was really surprised and interested to read more about it.
Thank you very much 🙏🏻