BILLIONAIRE Elon Musk has rocked the world of cryptocurrency by announcing Tesla will no longer accept Bitcoin payments because of environmental impacts.
The Tesla and SpaceX CEO’s tweet has seen the value of Bitcoin drop but has left many wondering how Bitcoin and the environment are related.
Why is Bitcoin bad for the environment?
Musk tweeted an image of a statement which said: “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.
He went on to add: “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.”
The problem surrounds the amount of energy used to mine a single Bitcoin.
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Computers are needed for complex mathematical calculations to put a new Bitcoin into circulation online.
This process is also known as mining.
A lot of energy is needed for Bitcoin mining and some experts are concerned that vast amounts of fossil fuels are being used to create this energy.
Musk has vowed to start Bitcoin transactions again when more sustainable energy is being used.
Sustainable energy options include wind and solar power.
The Centre for Alternative Finance has estimated that Bitcoin now accounts for 0.59% of global electricity production.
That may seem like a small number but it’s enough energy to keep kettles in the UK boiling for 33 years.
Reports suggest most Bitcoin mining happens in China and is fuelled by burning coal in the Xinjiang region.
Some people believe coal to be the worst fossil fuel because of the huge amount of pollution coal burning factories can create.
The good news is some cryptocurrencies require less energy than others, such as Musk’s beloved Dogecoin.
The Tesla CEO concluded his statement by saying: “We are also looking at other cryptocurrencies that use <1% of Bitcoin’s energy/transaction.”
Musk also isn’t ruling out Bitcoin forever, he’s just waiting for Bitcoin miners to clean their act up.
What is Bitcoin?
BITCOIN got you baffled? Here’s what you need to know:
- Bitcoin is a virtual currency
- It’s traded between people without the help of a bank
- Every transaction is recorded in a public ledger, or “blockchain”
- Bitcoin is created by mining
- Mining involves solving difficult maths problems using computer processors
- Bitcoin can be traded anonymously, which can make it a popular way of funding illegal activities
- The value of Bitcoin fluctuates wildly
- Bitcoin is one of many different cryptocurrencies, but by far the most popular
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This post first appeared on Thesun.co.uk
