Why Elon Musk is obsessed with the Energy Consumption of Bitcoin?
In January 2021, Tesla brought nearly 1.2 Billion worth of Cryptocurrency and also started taking payments in cryptocurrency. This made cryptocurrency grow to a record high. But a month after investing, he said that. He stated that they are worried about the increasing Energy Consumption of Bitcoin using fossil fuels. So what happens to Elon musk that he takes a step back from cryptocurrency space?
In today’s blog, we are going to cover exactly the same i.e., increasing energy Consumption of Bitcoin using fossil fuel.
So let’s get started
Elon Musk’s relation to Bitcoin/Cryptocurrency
In late March, Tesla announced that would accept the digital currency as payment after commencing a $1.5 billion investment in bitcoin. The assurance of a juicy return fueled investors and value rise in bitcoin. This was the only reason which helped Cryptocurrency to reach $1 trillion m-cap prior to this year. In the increasing M-cap of Cryptocurrency major role was played by Elon Musk and his company.
Back step from Bitcoin
Recently Elon Musk raised concerns on Twitter about bitcoin’s energy consumption being derived from sources like coal and other renewable energy.
“We are concerned about the rapidly increasing use of fossil fuels for Bitcoin mining and transactions, especially coal, which has the worst emissions of any fuel,” Musk said on Twitter. He added that cryptocurrency is a “good idea on many levels” but its promise cannot come at a “great cost to the environment.”Elon Musk said.
Citing energy consumption by Bitcoin particularly by miners Elon Musk said that “they will not going to accept Bitcoins as payment mode”.
The price of Bitcoin has fallen over 19%. And not only Cryptocurrency, but Tesla’s stock also fall down from its record low for months.
Cryptocurrency did stage a short bounce after Musk states that,” Tesla had not sold its more than $1 billion bitcoin they bought in January 2021”.
Energy Consumption of Bitcoin
Along with the Twitter post Musk also shared a chart from the Cambridge Bitcoin Electricity Consumption Index (CBECI). This chart shows insane Energy usage over the past few months through cryptocurrency.
If you know that earning/getting bitcoin is an energy exhaustive process. The chart showed the evolution of its power usage, rising drastically from 2016 and accelerating sharply in 2020. The energy consumption on a yearly basis hits 149 terawatts per hour (TWh), an all-time high in 2020. This compared to Google’s whole energy usage is 12.2 TWh in 2020.
And the nearly 200 TWh used by all data centers in the world, according to the International Energy Agency (IEA).
There was an analysis by Deutsche Bank that said that “If Bitcoin was a separate country, it would use approximately the same electricity of a year as Switzerland does in total,”.
CBECI also predicts that the situation could worsen. If miners used the most energy-intensive equipment, their consumption could climb to 500 TWh.
But exactly why?
Cryptocurrency is like a game in some aspects. Let me tell you.
Cryptocurrency is earned by participants in the system called “miners,” who solve calculatingly complicated equations using smart computer systems under the so-called “proof of work” protocol. “Proof of work” is the fundamental principle of cryptocurrency.
The minor’s system is designed in such a way that around every 10 minutes, the network awards some bitcoin to those who split the riddle successfully.
But with the rise in the share price of bitcoin, attention in obtaining it has followed, along with consumption of electricity.
Impact on Climate Change
Last month, a journal named Nature published analytics. The analytics said that “Carbon Emissions from mining in China could negotiate its climate goals. China relies on a particularly polluting type of coal, lignite to power some of its mining purposes.
Further, Bloomberg predicts that it will take 40 more years to China to meet up its cryptocurrency industry’s needs with renewable energy sources.
“Tesla’s move might provide as a wake-up call to businesses and consumers using Bitcoin, who hadn’t till now considered its carbon footprint,”said by a financial analyst at AJ Bell.
So that’s all about the Energy Consumption of Bitcoin.
If you like the post, make sure to share it with your friends. In the last take care of yourself and your family.
We will catch in the next one.