- Elon Musk announced on Thursday that Tesla would no longer accept Bitcoin to purchase its vehicles.
- The decision has led to a heated debate over the amount of electricity required to mine bitcoins.
- Tesla’s move has resulted in attention being drawn towards more eco-friendly crypto alternatives, including Cardano and Chia.
Elon Musk, the Founder of revolutionary electric car company, Tesla (NASDAQ:TSLA), announced on Thursday that Tesla would cease to accept Bitcoin as payment for their vehicles.
Musk tweeted his concerns regarding the increased use of fossil fuels required for Bitcoin’s mining and transactions.
Bitcoin Mining (Source: © Arinahabich08 | Megapixl.com)
The immediate consequence of the announcement drove Bitcoin’s price down more than 12% to below US$50,000. Musk’s decision also caused quite a stir amongst crypto users regarding the validity of Musk’s reasoning for separating Tesla from the world’s largest cryptocurrency.
One criticism from popular alternative digital currency Binance argued that governments and banks use considerably more energy than Bitcoin.
Others pointed to research by Ark Investment, which published that 76 per cent of Bitcoin miners use renewable carbon-free energy and is therefore not as harmful to the environment as critics claim.
In April, Ark Investment went as far as to suggest that Bitcoin mining could actually speed the transition to cleaner power sources such as solar and wind.
However, research from the Cambridge Center for Alternative Finance found quite the opposite. One fact they published revealed that Bitcoin uses enough electricity in a year to satisfy energy the needs of Cambridge University for 850 years.
Moreover, the same report concluded that Bitcoin consumes almost the same amount of electricity as Egypt and Malaysia and significantly more than Sweden.
In 2019, demand for electricity in Iran increased by seven per cent in June as a result of crypto mining. Iranian authorities subsequently confiscated 1000 Bitcoin mining machines.
Are the Cryptos ‘Greener’ on the Other Side
So, let us say that the current methods of crypto mining in digital currencies such as Bitcoin are, in fact, harmful to the environment. Why is this happening?
The most energy intensive part of crypto mining is something called “proof of work” which requires miners to solve complex mathematical problems. Only it is not the person solving the problem, it is the computer. The mathematical problems that are presented, which will then release the coin, is so complex that an exorbitant amount of energy is required to solve them.
So, is there a viable alternative currently available that does not consume as much electricity as a small country?
Evidently, yes there is, and it is making quite a name for itself. The digital currency is called Chia (XCH) which started trading just last week at US$1,600 per coin.
Source: © Selagin| Megapixl.com
Its creator, Bram Cohen who also founded the file-sharing platform, BitTorrent, claims that Chia’s method of mining makes it more eco-friendly than other cryptos. This is due to the claim that its mining is far less energy consuming than alternatives such as Bitcoin.
Cardano: The Crypto That Rose After Musk’s Announcement
The other – and probably most well-known ‘green’ crypto is Cardano. Whereas many cryptos require proof-of-work to release coins, Cardano uses something called “proof-of-stake”. This means that on this network, miners can only mine an amount based upon how much crypto they currently own.
Cardano’s price rose post Elon Musk’s announcement (Source: © Shahurin| Megapixl.com)
This essentially sets a limit on how much of the coin can be mined, thus using less energy to do so.
Cardano’s more eco-friendly method of mining did much to serve the coin’s price following Musk’s announcement to separate Tesla from Bitcoin. Whereas the decision led to an immediate decline in many other cryptos, including, of course, Bitcoin, Cardano rose 10% in the hours following Musk’s announcement.
INTERESTING READ: What Is Cardano (ADA) Crypto? What Is Its Price Prediction?
Despite the apparent change in attitudes towards eco-friendly cryptocurrencies and Bitcoin’s price drop in the past 24 hours, Bitcoin is still, by far, the most dominant digital currency, currently worth over US$50K.