Following the series of accusations and backlash levelled against Tesla CEO Elon Musk, the influential billionaire has given the conditions on which Tesla will again start accepting payments in bitcoin.
The growing tension between the bitcoin community, especially miners, and financial and media influencers have been rife. The last five months has seen many bitcoin miners and whale investors, and even CEOs of major cryptocurrency companies, take digs at influencers and the media.
And the one person that has come under a lot of criticism has been Elon Musk, the billionaire owner of Tesla.
Musk was accused of manipulating the price of bitcoin so that he could sell some of his bitcoins, an allegation which he had vehemently denied.
WHO ATTACKED ELON MUSK?
The influence Elon Musk holds in the world can’t be underestimated. When Musk tweeted about Dogecoin, the price of the coin increased significantly. So, it was not out of place when many people felt aggrieved about Elon Musk’s decision to stop Tesla from receiving bitcoin payments for Tesla electric cars. One of the aggrieved persons was the CEO of Sygnia Magda Wierzycka.
Magda Wierzycka said that the United States Security and Exchange Commission (SEC) should investigate Elon Musk for manipulating the price of bitcoin to favour him. The short-lived bitcoin-Tesla relationship was fake!
WHY WAS MUSK ATTACKED BY MAGDA WIERZYCKA?
Magda attacked Musk because the Billionaire had sold some of his bitcoins when the price of bitcoin was high, and then a few weeks later went back on his words about the Bitcoin-Tesla relationship. Tesla’s payment wasn’t in bitcoin anymore.
When a major business such as Tesla gives the greenlight for bitcoin payment, it is only normal that the cryptocurrency market responds with excitement. And this excitement meant more demands for the currency, and invariably an increase in the price. The crypto trading space experienced a bullish market a hours after Musk’s Bitcoin-Tesla announcement.
In May, Elon Musk announced through his Twitter handle that Tesla had bought $1.5 billion worth of Bitcoin, and would start accepting bitcoin payments for Tesla’s product. His announcement caused the price of bitcoin to rise on exchange platforms such as Binance, redot.com, crypto.com etc.
A month afterwards, Musk sold 10% of the newly bought holdings. Then, like a stopwatch, the billionaire went back on his words about his company accepting bitcoin payment, what many called the Bitcoin-Tesla relationship. On May 12, 2021, Elon Musk tweeted that Tesla would no longer accept bitcoin as payment because “of the network’s rapid use of fossil fuels.”
“Cryptocurrency is a good idea on many levels,” Musk said, “and we believe it has a promising future, but thus cannot come at a great cost to the environment.”
His tweet was met with a lot of negative reactions from miners and traders Alike. And their frustration was not without reason. Not only was Elon Musk suggesting that bitcoin mining is bad for the environment, his tweet also caused the price of bitcoin to fall from $54,800 to $46,000. The Bitcoin-Tesla pally was more disastrous than it was beneficial in the short-term.
And to make things worse, his tweet coincided with negative media attention on bitcoin and its effect on the climate.
Magda Wierzycka believes that Musk hyped bitcoin payment so the price could go up, then sold some of his coin to make profit, before going back on his words on bitcoin payment. This is price manipulation, the CEO of Sygnia said.
WHAT WAS MUSK’S RESPONSE?
Elon Musk responded to Magda’s accusation and called for the SEC to investigate him with. Musk said, in a tweet he put on June 13, 2021, that the accusation was inaccurate. He said Tesla sold 10% of its holdings to show customers how bitcoin could be easily liquidated without moving markets.
While Musk’s response to the accusations is fairly reasonable, one cannot but wonder whether his change of stance was a manipulative ploy.
Musk claims that bitcoin mining is detrimental to the environment that was why he stopped Tesla from receiving bitcoin payments.
IS BITCOIN MINING AFFECTING THE ENVIRONMENT?
The debate on how harmful mining cryptocurrencies are to the environment has gained a lot of media traction. The argument by those against bitcoin mining is that the amount of energy needed to mine bitcoin is increasing. The increased hash rate invariably means more gas is needed to mine one bitcoin.
The anti-bitcoin mining advocates claim that mining adds more carbon footprints to an already depleting atmosphere. While the world is trying to manage climate change and seek new ways to sustain the environment, bitcoin mining – and by extension, the mining of cryptocurrency and the minting of NFTs – would only destroy the environment further, drawing us closer to worse climatic conditions.
But is bitcoin mining detrimental to the environment or are anti-bitcoin mining activists overblowing the situation?
Research from Cambridge University revealed that bitcoin mining’s geography has changed over time.
China used to be the centre of bitcoin mining, but the Chinese government ban on bitcoin mining has decreased bitcoin’s carbon footprint.
With almost half of bitcoin miners taking off, thanks to the crackdown in China, the number of computers running simultaneously trying to mine bitcoin has reduced. This means that fewer miners are trying to mine fewer coins.
However, various studies show that bitcoin mining isn’t as environmentally devastating as many anti-bitcoin mining activists claim. The mining process has taken a new turn as many miners now use carbon-free sources for mining.
WHEN WILL TESLA START ACCEPTING BITCOIN PAYMENTS AGAIN?
In his tweet, Musk said Tesla would start accepting bitcoin payments when miners use clean energy in mining bitcoin. And by clean energy, Musk is saying miners need to use energy that doesn’t use fossil fuels, especially coal, which Musk said has the worst emissions of any fuel.
The future of bitcoin mining looks good as more and more miners are seeking new energy sources for mining.
After the tweet, Elon Musk was invited by The Bitcoin Mining Council, a voluntary self-regulating industry, to have an open table conversation. After the meeting, the miners promised to search for more renewable energy options and make the mining process more transparent.
Bitcoin payment is gaining considerable grounds in the world. As more businesses open their accounts to receive payment in bitcoin, big companies like Tesla can only but resist for so long. Tesla payment through bitcoin might have failed, but the future looks good for cryptocurrency being accepted as a legal tender.
And for the environmental concerns, more and more miners are more environmentally conscious now.