Crypto Global
The current debate about Bitcoin and energy consumption
May 18, 2021
Energy consumption, in turn, has become the newest hot spot for cryptocurrency. Critics refer to it as an energy hog, while proponents refer to it as the current world economy.
Elon Musk, CEO of Tesla, announced in a tweet last week that he would not accept payments in Bitcoin for Tesla. However, in a tweet early Monday this week, he stated that Tesla had "not sold Bitcoin". Elon Musk has concerns about Bitcoin mining and the environment. Energy consumption, in turn, has become the newest hot spot for cryptocurrency. Critics refer to it as an energy hog, while proponents refer to it as the current world economy.
Bitcoin's price has fallen sharply since Musk's tweet. Bitcoin price is currently under fifty thousand dollars. Even if you like to see Elon Musk promoting Bitcoin, accepting it as a means of payment for a short time and adding it to Tesla's balance sheet, you should stick to the following facts:
1. Elon Musk is still with billions of dollars invested in Bitcoin. Both Tesla, Spacex and Elon personally own billions of dollars in Bitcoin. He's certainly not selling his bitcoins because of that kind of energy use.
2. In a 2020 report from the University of Cambridge, researchers found that 76% of crypto miners depend on some level of renewable energy to run their operations. The reason for this is that the financial incentive for miners is to go around the world and find the cheapest electricity which is their biggest cost stake when mining Bitcoin. So miners are financially motivated to find this renewable energy. And if you look at the comparisons of how much coal is used in Bitcoin mining, Bitcoin is dwarfed by things like coal, which is used in the banking system. According to the University of Cambridge, Bitcoin miners consume around 130 terawatt hours of energy (TWh), which is about 0.6% of global electricity consumption. In terms of electricity costs alone, Bitcoin is much more efficient worldwide than traditional banking and gold mining. According to research by Ark Invest, the global banking and gold mining sector is ultimately far more inefficient than Bitcoin mining. The traditional banking sector consumes 2.34 billion gigajoules (GJ) (i.e. 650 TWh) and gold mining consumes 500 million GJ of electricity (i.e. 138 TWh) per year. We just need to remind ourselves here that the financial incentive for Bitcoin miners is to adopt renewable energy. We already have a lot of data on it. Studies have been done after studies that show miners do just that.
It may be that here at Elon Musk and Tesla you can see that this will be a launch pad for Tesla to eventually bring a mining rig for renewable energies or some kind of mining facility onto the market. We think this could actually be just part of a Tesla marketing ploy to get attention to the problem and then come up with a solution. Here, for example, the focus is on the fun currency Dogecoin, which Elon Musk has been promoting for months. It is important to note that Elon, with his billions of dollars in Bitcoin, or whoever is and remains invested in Bitcoin, is not suddenly going to change his mind about Bitcoin's future prospects. It's just one way for such well-known personalities to change the narrative so that they can bring their own product to market in the future. Musk is trying to accelerate the operation of the underlying blockchain technology for more energy-efficient technologies. He wants to work on a solution himself. He is currently working with Doge developers to improve transaction efficiency.
At DECOM, we are using this Bitcoin price weakness as a good opportunity to acquire more Bitcoin. Other big players in the crypto world are likely to do the same.