It all started with a declaration of love in February this year, not on Valentine’s Day, but a week before that. Tesla announced that it has invested $ 1.5 billion in bitcoin and will now accept cryptocurrency as a means of payment for its electric vehicles. It was a sign of confidence in the currency, which in the coming weeks will reach a record level, exceeding 60 thousand dollars. The decision also removed some of the barriers that existed in financial markets, leading companies like Visa and Paypal have accepted cryptocurrencies on their platforms, and banks like Goldman Sachs or JP Morgan have offered investment products that take them into account.
During the announcement, many critics pointed out that Tesla’s decision was not quite in line with its environmental and environmental values, which it has so promoted through its electric vehicles. Tesla’s Elon Musk, CEO or Technoking, didn’t seem to pay much attention to this renovation when the love of cryptocurrency exploded, but after the end of the honeymoon phase, relationship issues came to the fore. Last week in tweet (obviously) Musk disclosed that Bitcoin can no longer be used to buy cars until more sustainable methods of working with the network are found blockchain Platform. How big is the impact of Bitcoin on the environment? Let’s move on to some numbers:
- Bitcoin uses 0.5% of all electricity generated worldwide as a result of transactions and operations booty… This consumption is higher than in all of Argentina, which has a population of 45 million.
- Bitcoin Transaction Spends 707 kWh energy, 11 times more than Ethereum (the second largest cryptocurrency) and 6,000 times more than Dogecoin (a meme coin that is already the fourth highest capitalized digital currency).
- Bitcoin transaction uses the same energy as 1 million Transactions with Visa and equivalent 78 thousand hours to watch videos other than YouTube.
This is because the complex Bitcoin network requires thousands or even millions of attempts to complete a transaction in blockchain and this miners have a proper reward (in coins). This process means that a lot of electricity is ultimately consumed, which in most cases is still produced using fossil fuels that are harmful to the planet. Yet, some theories point to the potential of Bitcoin to subsidize renewable energy investments. Still to be seen.
What’s next? Musk’s decision caused a collapse in the cryptocurrency market:
1) Bitcoin has depreciated about 25% and is now worth $ 42,000 (as of the date of this newsletter).
2) Globally, the market has lost $ 400 billion, given that many cryptocurrencies are correlated with the value of bitcoins.
It is not yet known which path the South African billionaire will take, but for now these are some ideas that can be gleaned from his activity on Twitter.
- Tesla will not sell your bitcoinsand do not accept currency in transactions until more sustainable methods of dealing with it have been found.
- Tesla will look for solutions that other cryptocurrencies can offer, namely those that govern spend less than 1% of the total energy spent by Bitcoin.
- It’s hard to tell a joke from the truth, but last week Musk launched a poll in his account in which his followers asked if Tesla should use Dogecoin as a payment method. 4 million people responded, of which78% said yes.
We don’t know if Musk is ready to move on and find new love, but the Doge’s constant support, whether with memes, whether in sketches humorouswhether giving name Doge-1 to one of SpaceX’s rockets, this seems to indicate that this is the case. This is another example of the influence of a billionaire and how his words influence the direction in which financial markets can develop.
Affiliate Article
The Next Big Idea is an innovation and entrepreneurship site with the most complete database of startups and incubators in the country. Here you will find stories and protagonists that tell how we are changing the present and inventing what the future will be like. See all stories at www.thenextbigidea.pt
