Yesterday, Tesla CEO and all-round tech celebrity Elon Musk made (another) surprise announcement. Taking to Twitter, Musk posted a statement saying that Tesla would no longer be accepting Bitcoin as payment for its vehicles.
The decision caused instant uproar among Bitcoin advocates, who saw the value of their investments take an instant hit. In about an hour, the value of one Bitcoin plunged more than $5,000, from above $52,000 to less than $48,000, though it quickly recovered about half of that loss, reaching $50,429 at the time of writing.
Today, Musk followed up his announcement with a sequel. Posting a graph from the University of Cambridge’s Bitcoin Electricity Consumption Index (CBECI), he said: “Energy usage trend over past few months is insane.”
Musk’s announcement drew a rather different response from climate advocates than it did from the cryptocurrency community. Climate researchers have long voiced concerns about the increasing amount of energy required to mine Bitcoin. CBECI calculates that at present, Bitcoin is using some 149 terawatt hours (TWh) of electricity per year (the Republic of Ireland used 184 TWh of electricity in 2019). Last month, Chinese researchers revealed that Bitcoin miners in China could be producing 130 million tons of carbon a year by 2024, rivalling the emissions output of some small countries.
This being the case, Mark Maslin, professor of earth system science at University College London, welcomed Musk’s decision.
“I was surprised but extremely pleased by Musk’s announcement,” Maslin told me. “It shows that green companies like Tesla are taking all aspects of their business seriously when it comes to mitigating carbon emissions. I hope that other companies follow very quickly to ensure that the purchases of goods is carbon neutral.”
Maslin, a Royal Society Wolfson Research Merit scholar, said he thought Musk’s move would send a strong signal to other firms who might have been on the fence about Bitcoin.
“The motivation behind Musk’s decision is to do the right thing for the environment and to ensure that Tesla maintains their position as a leading green company,” he said. “Companies and organisations are all deeply conservative and rarely want to be the first to anything that seems risky or ahead of the field. This was the same when companies were first think of going carbon neutral: none really wanted to be the first. I would expect most major companies will follow Tesla in refusing Bitcoin in the near future.”
Bitcoin as a technology, Maslin said, had failed to keep up with the zeitgeist in terms of its environmental impact. While some cryptocurrencies such as Ethereum have announced they will be moving to a less energy intensive mechanism, proof of stake, to reduce emissions, there has been no such suggestion regarding Bitcoin.
“If Bitcoin and other cryptocurrencies are going to survive and not go the way of Blockbuster, then they need to evolve and help save our planet,” Maslin said. “One way of doing this is to ensure every coin has its carbon footprint attached to its blockchain – that way the market can change the value of coins based on their emission profile.”
Genevieve Guenther, founder of volunteer organization End Climate Silence and an expert reviewer to the Sixth Assessment Report of the UN’s Intergovernmental Panel on Climate Change, likewise welcomed the decision, but wondered whether there was more than one motivation behind it.
“I was happy to see that Musk decided no longer to accept Bitcoin as currency. Given the extreme energy demands of Bitcoin mining, the world will need to move away from this currency if we are going to draw our greenhouse gas emissions down to zero, which will involve increasing efficiency and lowering consumption as it is,” she said.
“I don’t think Musk changed his mind on Bitcoin for purely altruistic reasons, though. I think the Tesla brand relies on the perception that Musk is a climate champion, which is a hard image to sustain when you’re promoting Bitcoin.”
For Joeri Rogelj, director of research and lecturer in climate change and the environment at the Grantham Institute, Imperial College London, Musk’s move was a logical step when viewed in the context of the broader shift towards decarbonization.
“The energy and carbon footprint of cryptocurrencies is well documented: mining for bitcoin uses significant amounts of energy which is often drawn from polluting sources,” he said. “At the same time, we understand that to reduce our economies’ greenhouse gas emissions in line with the Paris Agreement’s climate goals both the supply of energy needs to shift to zero-carbon sources and energy demand needs to be managed. A booming energy demand and use of carbon-intensive energy sources is not in line with a low-carbon transformation. It therefore makes sense to choose lesser polluting alternatives.”
Kaveh Madani, visiting professor at the Centre for Environmental Policy, Imperial College London, agreed, but expressed astonishment that Musk hadn’t considered the environmental impact of Bitcoin earlier.
“We should welcome his expression of public concern about this issue, but I am extremely surprised that a leading company like Tesla and an exceptionally bright tech leader like Elon Musk were unaware of the environmental cost of Bitcoin mining,” Madani told me. “They knew that their decisions to turn their assets into Bitcoin and recognizing it as an acceptable currency would encourage mining and increase the Bitcoin price. We already knew that the growth in Bitcoin mining’s carbon contributions is a major barrier to meet the goals of the Paris Accord. Were Tesla and Musk unaware of this?”
Madani also noted that Musk did not mention any other cryptocurrencies in his announcement, even though Bitcoin is not the only cryptocurrency with an environmental footprint. “This announcement could result in a degrowth in the Bitcoin market and growth in the market cap of other cryptos, which will make a lot of people bankrupt and some people rich, but will not change the overall environmental footprint of the global crypto market,” he said.
Elsewhere, Madani drew attention to a little-discussed aspect of crypto: environmental impacts beyond emissions, which he and his colleagues at Imperial have been researching. “If Tesla and Mr Musk didn’t know this already, the environmental impacts [of Bitcoin mining] are not limited to their carbon footprint. The crypto sector also has big water and land footprints. Switching to renewables can reduce carbon emissions but can increase the negative impacts on water and land around the world if not done properly. So encouraging a blind transition to renewables can cause problems down the road.”
A report from Madani and colleagues on these impacts is forthcoming.
Meanwhile, Will Pearse, senior lecturer in applied ecology at Imperial College London, was critical of Musk’s whole approach.
“The announcement followed Musk polling for interest in a different kind of cryptocurrency: Dogecoin,” Pearse said. “Thus Mr Musk seems to have changed his opinion on the entire thing quite literally overnight, which should perhaps be less surprising to me than it was.”
Pearse, who founded the Pearse Lab of Environmental Ecology, said that about-face decisions were a feature of the startup world, but that acting impulsively and without a consideration of cause and effect could have serious repercussions felt outside of the business world.
“Musk himself has said that it’s ‘Better to do something good and be late than bad and be early,’” Pearse noted. “Sadly, in this case Musk has managed to achieve both parts of his aphorism simultaneously. But I am willing to give him the benefit of the doubt and say he was ignorant of the impacts and now he has learned. I only wish he had taken the time to consider the impacts of Bitcoin sooner.”
Unlike the price of Bitcoin, Pearse pointed out, global warming can’t simply be made to bounce up and down on a whim: major decisions made now could affect the world for centuries to come. Referring to Musk’s stated desire to colonize the Red Planet, Pearse concluded: “I genuinely applaud his willingness to change, but the environment cannot react as quickly as the stock market. Musk clearly sees himself as a visionary, but he must expand that vision to include the environment or he will leave behind an Earth trashed in pursuit of a barren, distant Mars.”
My interview with Mark Maslin on his new book, How To Save The Planet, is coming soon to Forbes.com. Subscribe to my channel now for updates.