Bitcoin’s Shift to Renewables: Will Tesla Reconsider it’s Stance?

Tesla halted Bitcoin payments due to environmental concerns, yet Elon Musk promised to resume them if the network’s renewable energy usage improved.

Four years have passed since Tesla ceased accepting Bitcoin payments, citing environmental concerns. Although the Bitcoin mining industry has reportedly increased its share of renewable energy consumption, Tesla does not appear ready to resume Bitcoin payments anytime soon.

On February 8, 2021, Tesla disclosed a $1.5 billion investment in Bitcoin in a filing with the United States Securities and Exchange Commission (SEC).

Tesla CEO Elon Musk decided to include the cryptocurrency in the company’s treasury and began accepting BTC as a form of payment for Tesla’s electric vehicles.

However, on May 13, 2021, Tesla stopped accepting Bitcoin as a means of payment due to concerns over the rapid increase in fossil fuel usage, particularly coal, for Bitcoin mining and transactions.

While Tesla stopped taking BTC, it stated it would accept Bitcoin again once the cryptocurrency became more sustainable.

On June 13, 2021, Musk indicated that Tesla would allow BTC transactions once it could be verified that at least 50% of the energy used by miners was clean and had a positive future trend.

Since 2021, the dynamics of Bitcoin have evolved significantly. There has been indirect institutional adoption through spot Bitcoin exchange-traded funds (ETFs), acceptance as legal tender, technological advancements in its protocol, and improvements in renewable energy usage for crypto mining.

According to a graph modeled by climate tech venture capitalist Daniel Batten and data analyst Willy Woo, Bitcoin mining’s sustainable energy usage is currently at an all-time high of over 55%. This increase is part of a sustained positive trend since mid-2021.

Both of Musk’s conditions seem to have been fulfilled. Will he and Tesla now honor their promise and reinstate Bitcoin payments?

Wild Claims by Bitcoin Miners About Renewable Energy Usage

Major decisions like accepting a cryptocurrency for payments in a multibillion-dollar business require verifiable and solid data. But is the data on Bitcoin mining energy solid enough?

Alex de Vries, a data analyst and researcher at Vrije Universiteit Amsterdam and De Nederlandsche Bank, told Cointelegraph that Bitcoin miners’ energy disclosures lack transparency and verifiability.

“The Bitcoin mining industry often champions transparency until specific data is requested.”

He believes that regulations like the European Markets in Crypto-Assets Regulation (MiCA) will expose these companies’ lack of transparency. MiCA mandates the disclosure of information that is “rigorous, systematic, objective, capable of validation, and applied continuously.”

De Vries highlighted how the United States Energy Information Administration (EIA) faced challenges when attempting to gather data from crypto miners firsthand.

In early 2024, a coalition of crypto miners, including Riot Platforms and the Texas Blockchain Council, sued the EIA, alleging that the agency’s request for energy usage data was overly intrusive. The EIA lost the case and agreed to delete all the collected data.

De Vries noted that miners have made exaggerated claims about their use of renewable energy. He recalled a situation where CoinShares, a digital asset firm, asserted in 2019 that 78% of miners used renewable energy, only to retract that claim years later.

He believes Musk was “well aware” of such data manipulation, suggesting it could be a factor influencing Tesla’s decision to cease accepting Bitcoin.

The decision to reintroduce Bitcoin payments at Tesla remains uncertain.

It appears Musk’s decision on whether to bring Bitcoin back to Tesla remains highly uncertain and complex. While he has shown resilience against public backlash in pursuit of his goals, the environmental concerns surrounding Bitcoin conflict with Tesla’s mission of sustainability. Despite conflicting data on Bitcoin’s environmental impact, experts like De Vries warn that relying on current claims about Bitcoin mining and renewables could lead to another public relations crisis for Tesla.

On one hand, proponents argue that Tesla, as an electric vehicle manufacturer, already contributes significantly to environmental progress and may not need to yield to pressure from environmentalists regarding Bitcoin. However, critics argue that using renewable energy for Bitcoin mining may not align with broader societal goals, especially concerning electronic waste generation.

Ultimately, Musk faces a strategic decision where the consequences of action or inaction could impact Tesla’s reputation and stakeholder perception. Whether Musk decides to reintroduce Bitcoin payments at Tesla may hinge on various factors, including his own strategic goals and potential regulatory considerations. As the CEO of Tesla, Musk holds the final authority over this decision, which remains a topic of ongoing speculation and debate.

If Elon Musk were to reintroduce Bitcoin at Tesla, he would need to be well-prepared with substantiated data and be ready to face potential backlash, particularly from advocates of green policies.

Tesla did not provide a response to Cointelegraph’s inquiry on this matter.

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