- Tesla started accepting Bitcoin payments for its cars in March this year.
- It has now stopped the payment option citing harmful impacts to the environment from its mining operations.
- It says it will hold its stack of $1.5 billion worth of Bitcoin and intends to use it later when environmental conditions of Bitcoin are met.
Tesla has suspended the use of Bitcoin for the purchase of its cars. The update has been shared by Tesla CEO Elon Musk, just over a month after the US-based electric vehicle started accepting Bitcoin as a payment option.
In a statement shared by Musk on Twitter on Wednesday, the company cites environmental reasons for stopping Bitcoin payments. As a result, it will no longer accept cryptocurrency as payment for Tesla cars.
"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 statement reads.
The "great cost" mentioned here refers to the emissions generated through the use of fossil fuels for Bitcoin mining. Tesla says that it is "concerned about rapidly increasing use of fossil fuel for Bitcoin mining and transactions, especially coal, which has the worst emissions of any fuel."
The underlying principle is that Bitcoin mining requires a huge amount of computing prowess, which is usually met by powerful computing machines. With the increase in the value of Bitcoin, or cryptocurrency in general, mining of cryptocurrency has become much more profitable. Hence an ever-increasing number of operations are being carried out.
As these machines require electricity to run, they gradually become a load to bear for the existing power supplies. Bitcoin-mining operations around the world collectively use around a hundred and twenty terawatt-hours of energy every year, about the same as some countries.
Environmentalists have long contested the use of cryptocurrencies because of this. As the number of cryptocurrencies and their use grows, the situation is only going to worsen for the environment. Tesla apparently realises this.
Note that cryptocurrency mining is only as bad as the source that powers the electricity for the operations. If the electricity powering the mining operations is produced through coal, it is bound to have a huge environmental impact. If the same electricity is provided through harnessed solar energy, the impact can be reduced to near negligible amounts.
Tesla hints at this in its statement. It says that it intends to use its own $1.5 billion worth of Bitcoin in the near future when the mining is powered by a more sustainable energy source. This means the company will resume Bitcoin payments at some time in the future, provided the environmental conditions are met.
For now, Tesla is looking at other cryptocurrency alternatives that use less than 1 per cent of Bitcoin's energy or transactions. If it is to double down on one, that crypto shall be the new Tesla payment option for buyers.