Bitcoin price leaps as Musk says Tesla will use the cryptocurrency when it gets cleaner

·2 min read
SpaceX and Tesla chief Elon Musk poses on the red carpet of the Axel Springer Award 2020 on 1 December, 2020  (Getty Images)
SpaceX and Tesla chief Elon Musk poses on the red carpet of the Axel Springer Award 2020 on 1 December, 2020 (Getty Images)

Bitcoin’s price has risen about 11 per cent in the last 24 hours after Tesla chief Elon Musk said on Sunday that the company would start accepting bitcoin as a mode of payment when there is a trend of “reasonable” clean energy use by miners.

“When there’s confirmation of reasonable (~50%) clean energy usage by miners with positive future trend, Tesla will resume allowing Bitcoin transactions,” Musk tweeted.

The Tesla chief also added that the company only sold about 10 per cent of holdings to confirm that bitcoin could be “liquidated easily without moving market.”

While only in February Tesla revealed it had bought $1.5bn of bitcoin and that it would accept the cryptocurrency as a form of payment for cars, last month the company flipped its position and suspended vehicle purchases using the virtual tokens citing increasing use of fossil fuels for its mining.

The bitcoin mining process to create new units of the virtual currency requires solving complex mathematical equations dependant on high levels of computer processing power.

Tesla’s move, coupled with China’s crackdown on cryptocurrency mining in the country, caused the prices of several virtual tokens including bitcoin to plummet.

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“Tesla has suspended vehicle purchases using Bitcoin. We are concerned about rapidly increasing use of fossil fuels for Bitcoin mining and transactions, especially coal, which has the worst emissions of any fuel,” the SpaceX and Tesla chief had tweeted.

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Analysis by University of Cambridge had pointed that the cryptocurrency uses more than 121 terawatt-hours (TWh) annually, which would rank it in the top 30 electricity users worldwide – consuming as much as Argentina.

“Cryptocurrency is a good idea on many levels and we believe it has a promising future, but this cannot come at great cost to the environment,” Musk noted last month in a tweet.

However, experts also believe the establishment of crypto mining farms in cooler countries like Norway – where most of the electricity comes from renewable sources like hydropower – is a positive step.

Last week El Salvador also announced plans to use geothermal energy from the South American country’s volcanoes for mining for bitcoin after authorising the cryptocurrency as legal tender.

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