Bitcoin is once again in the middle of a conversation about climate change and marginal utility. On Wednesday evening, Elon Musk blew a hole through bitcoiners’ hearts when announcing his car company, Tesla, will pause BTC payments. His reason: The societal benefits of bitcoin “cannot come at great cost to the environment.”
The electric car manufacturer will hold on to its $2.5 billion BTC reserve and plans to resume accepting the orange coin if/when mining “transitions to more sustainable energy.”
There are many questions I, like many, have about this about-face. Did Tesla really not do due diligence on bitcoin’s coal-heavy provenance when moving into the market three months ago? Is the decision somehow tied to “renewable credits?” Can I sue?
Musk’s motivations are often impenetrable. But it’s clear this is just the latest front in a longstanding debate over whether bitcoin, a global monetary layer accessible to any and all, is worth the ecological price everyone pays.
The world’s second richest man is now somewhere in the middle of a messy continuum between those who think bitcoin is a useless drain on resources and those who might welcome razing the Amazon to build additional mining facilities.
He’s also a man with tremendous influence. On Feb. 8, the price of bitcoin jumped 14% after Tesla parked $1.5 billion in the asset. The Musk effect of a single DOGE meme often (though not always) leads to double-digit price spikes. Yesterday, his tweets erased some $350 billion from the entire cryptocurrency market (it has since pared back some losses).
Taking Musk at his word, Mike Novogratz said the space-faring, erstwhile comedian has presented bitcoiners with an ultimatum to go green or go home. Musk may be using his influence to achieve what other bitcoin heavyweights – like Twitter's Jack Dorsey and Ark Invest's Cathie Woods – have long promised: to spur renewable energy innovation.
It’s an important goal. The bitcoin hashrate, a proxy for its energy consumption, has climbed to record highs during the recent bull run. Reuters reports mining consumers 66 times more electricity than in 2015.
Long the preserve of iconoclasts, cryptography nerds and free bankers, bitcoin this year moved into the financial mainstream. It’s no longer isolated from the larger political or social conversation. As long as people continue to like Earth and equality, bitcoin’s environmental and social “toxicity” will dominate headlines.