Tesla Removes Bitcoin As Payment Option For Its Vehicles

Elon Musk revealed that Tesla (TSLA) will no longer accept Bitcoin as a means of payment for its cars. The Tesla CEO made the announcement via a post on his Twitter handle and cited the reason for this change as environmental concerns.

In March, the electric car company revealed that people in the United States could now pay for Tesla cars with Bitcoin, as it was adding the digital coin as a payment option, promising to roll out the option to buyers in other countries soon.

The company also invested $1.5 billion worth of crypto in the first quarter of 2021. Although about $272 million worth of the crypto was sold by the company, which boosted its first-quarter earnings, it still has a huge amount of crypto left. 

The value of Bitcoin fell by over 15% after the tweet, going from about $53,000 to $46,000. It is, however, slowly coming up, as it currently is trading for $50,337.

Tesla's decision to accept the crypto was a major moment for the crypto, as it gave it a level of validity. 

This once again proves Elon Musk's influence on the market. Just Saturday, his comments on the popular show, Saturday Night Live, sent the price of Dogecoin spiraling, angering a lot of fans and investors alike.

However, the CEO has said that he still believes in the power of Bitcoin, and the company will resume accepting the digital coin as payment as soon as a more sustainable way to mine the coin was discovered. While he is under a lot of fire, especially on social media as crypto investors are upset about the price drop, there is admittedly, some rationale behind the decision.

According to the Cambridge Centre for Alternative Finance, Bitcoin mining consumes about 148 terawatt-hours of energy annually. To put it into context, it is enough energy to power a small country, like Argentina or Greece, for a year.  Also, it is one of the biggest carbon-emitting sectors, as a single Bitcoin has a carbon footprint of 270 tons.

The energy is used up in Bitcoin mining, which involves solving energy-intensive mathematical problems by several computers. The mining process requires computes around the world to compete by solving difficult problems for ten minutes, whoever wins is rewarded with a Bitcoin. The entire mining process uses up about 5 gigawatts of energy, about 1% of the entire energy in the world.

This process creates copious amounts of greenhouse gases, like carbon dioxide, methane, and ozone, which allow sunlight to enter the atmosphere but also trap heat. This means that the more electricity is produced, the hotter our planet gets.

Just as Elon Musk said, Bitcoin might be a great idea, but it also comes at a great cost to the environment. He also said that the company was looking at other crypto options which involved less energy.