Tesla CEO and outspoken cryptocurrency advocate Elon Musk has announced on Twitter that the electric-car company is suspending Bitcoin payments due to environmental concerns.
Cryptocurrency “cannot come at great cost to the environment,” Tesla said in a statement. Praising crypto’s “promising future”, the electric carmaker said it intends to use Bitcoin for transactions as soon as the mining transition to more renewable energy. Also, it is looking into less energy-consuming cryptocurrencies than Bitcoin.
Bitcoin’s prices fell about $2,000 after Musk’s tweet. At the time of writing, Bitcoin is trading at $51,226, down 9.4% over the previous 24 hours. Ethereum dropped below the $4,000 level to $3,994, down 3.9%.
Tesla’s decision to accept Bitcoin in February 2021 was a watershed moment for corporate cryptocurrency adoption. At that time, the company also announced a $1.5 billion investment in Bitcoin as a treasury asset.
Bitcoin, the largest crypto by market cap, has been blamed for cryptocurrency’s energy consumption problem.
‘Greener’ Cryptocurrency: Ethereum?
Bitcoin is a Proof-of-Work (PoW) blockchain reliant on energy-intensive mining equipment. On the other hand, Ethereum (ETH), the second-largest crypto by market cap, has consumed much less in mining than what Bitcoin mining does. According to statistics, as of last year, the Ethereum blockchain consumed between 20 and 25 terawatt hours annually – roughly one sixth of Bitcoin’s expenditure.
In its major upgrade to Ethereum 2.0, Ethereum aims to replace the PoW mechanism with a less energy-guzzling security make-up, the Proof-of-Stake (PoS) mechanism. If successful, the move could reduce Ethereum’s carbon footprint and wastefulness.
Under the PoS mechanism, mining nodes are replaced by validators, required to put down a substantial sum as a deposit to participate in the network. The deposit, namely the stake, accrues interest over time, thus providing an incentive for validators to join.
Replacing the race to solve mathematical problems, an algorithm appoints validators at random to wave through transactions, which are then confirmed if approved by two thirds of the network.
Upcoming upgrades on Ethereum aims to reduce network energy consumption by removing the need for mining.
Lately, a new cryptocurrency, Chia, created by a platform called the Chia Network, advertises itself as “a ‘green,’ eco-friendly alternative” to Bitcoin. Because of its technology, Chia can be “farmed” easily at home (at least for now) – a big difference from the mega-scale data centers that dominate Bitcoin mining.
Additionally, Elon Musk started a Twitter poll asking whether or not Tesla should accept Dogecoin (DOGE). The poll had received more than 39 million votes of its posting, with the overwhelming majority (78%) replying “Yes.”
However, Dogecoin is also a crypto based on a PoW blockchain reliant on energy-intensive mining equipment.
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