Why does Elon Musk doubt the future of Bitcoin?

why-does-elon-musk-doubt-the-future-of-bitcoin

Bitcoin is a cryptocurrency that has taken the world by storm. It is the most valuable and popular digital currency with a massive demand all over the world. Recently, Elon Musk stopped accepting bitcoin in his company, and he gave some reasons that were quite clear. It had a huge impact on the popularity and price of bitcoin.

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Does bitcoin really consume massive energy?

Bitcoin investors were quite happy when Elon Musk announced that Tesla has started accepting bitcoins as a payment method. But the happiness didn’t stay for too long as Tesla’s owner doubted the future of bitcoin and criticizes it about the negative impact it has on the environment. Following that, he also announced that Tesla would no longer accept bitcoins because of the poor impact on the world environment. He tweeted, ‘Energy Usage trend over past few months is insane. He also shared a chart displaying the electricity consumption caused during bitcoin mining. The statement took a toll on bitcoin’s price as it feels quick and reaches its two-month low.

The chart clearly displayed how the power consumption in bitcoin mining started increasing from 2016 and boosted further in 2020 and touched 149 terawatt-hours which is an all-time high power consumption if we talk about bitcoin mining. The total amount of energy used by Google is 12.2 TWh which is way less than bitcoin. It is the primary reason that it is a huge concern for environment lovers. The total amount of electricity that gets consumed in mining is even more than the total consumption of Switzerland. The worse part is that with the rapidly increasing demand for bitcoin, miners are expected to boost the process, increasing energy consumption.

Musk stopped accepting bitcoin due to the energy consumption

Now you already know the harmful environmental impact of bitcoin, but its high energy consumption is the major reason that Elon Musk dropped the idea of accepting bitcoin payments for his electric vehicles. When he made the announcement, a drop of 15% was seen in the price of bitcoin, and it took the investors with a shock as no one was expecting it. Bitcoins are issued in the market by miners who solve complex problems and equations using the massive power of supercomputers and follow the ‘proof of work protocol. It is the reason why bitcoin consumes so much energy and is considered to be bad for the environment.

Bitcoin is based on blockchain technology, and to issue new bitcoins, blocks are added to the blockchain. Every 10 minutes, a new block is added to it by the miners, and they are also rewarded for it. Earlier, bitcoin mining was not popular, so its electricity consumption was also lower, but now everyone wants to acquire bitcoins which has led to an increase in bitcoin mining. The more bitcoins will be mined, the more energy will be consumed, and in the end, it will have an adverse impact on the environment.

China is the hub for bitcoin mining

Over 80% of the total bitcoin mining is done in China, and it will surely affect the climatic condition of the country in a bad way. Currently, the country completely relies on the non-renewable source of energy, and it is not possible before 2060 that it can use renewable energy to meet the electricity needs for bitcoin mining. The only way that is possible in the current scenario to reduce the consumption is to change the “proof of work” model and turn it into the model used by Ethereum. Bitcoin can take inspiration from Ethereum to reduce the power consumption, but the chances for it is minimum as it will make the bitcoin network unsafe.

The move by Elon Musk has awakened other business too which has been using bitcoins for years. It has raised several doubts about bitcoin in the mind of users. It will surely have a negative impact on its market as well as price.

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