Tesla founder Elon Musk tweeted on Sunday that the company would resume acceptance of Bitcoin when mining can done using clean energy.
The electric car maker will allow bitcoin transactions again “when there’s confirmation of reasonable (~50 per cent) clean energy usage by miners with positive future trend,” Musk, Tesla’s chief executive, said in a tweet.
His statement led to a rally in bitcoin which jumped above $40,600, on Monday morning.
His posting was in reply to a report in Cointelegraph, which cited Magda Wierzycka, the executive chair of South African asset manager Sygnia, as saying Musk’s recent tweets on bitcoin should have prompted an investigation by the US Securities and Exchange Commission.
This is inaccurate. Tesla only sold ~10% of holdings to confirm BTC could be liquidated easily without moving market.
When there’s confirmation of reasonable (~50%) clean energy usage by miners with positive future trend, Tesla will resume allowing Bitcoin transactions.
— Elon Musk (@elonmusk) June 13, 2021
Musk’s tweets have affected the value of bitcoin and other digital tokens in the past few months.
In February, Tesla announced it had bought $1.5 billion in bitcoin and signaled its intent to start accepting bitcoin as payment for vehicles.
In March, Musk tweeted, “you can now buy a Tesla with bitcoin”, only to say in May that the practice had been suspended due to concerns about fossil-fuel usage for bitcoin mining and transactions.
But it is not just Musk making waves in the Bitcoin world. Last week, former President Donald Trump said bitcoin was a “scam,” leading to a cryptocurrency sell-off.
“Bitcoin, it just seems like a scam,” he told Fox Business. “I don’t like it because it’s another currency competing against the dollar… I want the dollar to be the currency of the world. That’s what I’ve always said.”
Bitcoin was down 8.5 percent last Tuesday morning, trading at $32,871, while Ethereum (ETH-USD) — the world’s second largest crypto by market cap — fell about 9 percent and was trading at $2,498. The meme-inspired dogecoin plunged 12.6 percent, trading at $0.324.
Musk’s environmental concerns about Bitcoin
Speaking recently to Greek Reporter, Lexy Prodromos, Executive Director at the Chicago Blockchain Center, a non-profit public/private initiative dedicated to blockchain advocacy, education and community innovation, said that bitcoin volatility is nothing new.
“These environmental concerns that Elon was speaking about have been somewhat well-known in the cryptocurrency space and with Bitcoin for a long time,” she told Greek Reporter.
The Greek-American Bitcoin exec points to several independent studies comparing Bitcoin and its energy costs to the US dollar based “Fiat” banking ecosystem. “The economic cost of Bitcoin is obviously much, much less,” she notes.
“I think people are recognizing Bitcoin’s value and that it is a scarce digital asset, that will gain in value over the long run,” Prodromos said.
In fact, there are only 21 million bitcoins that can be mined in total, with the final coins being minted in around 2140. Once the circulating supply reaches its maximum, Bitcoin miners will no longer receive block rewards — since there’s only ever going to be 21 million of them.
The limited supply of Bitcoins is one of the reasons, proponents believe, that its value will keep on rising despite occasional hiccups.
“I’ve been around in the space for the last five or six years or so. And even in that time we’ve had price dips like this before, we’ve had several magazine articles over the years declare that Bitcoin and cryptocurrency is dead,” the Greek-American exec notes.
The cryptocurrency community is growing “despite lots of lots of misinformation and somewhat bad press over the years. It’s just really continued. And I think the resiliency of the Bitcoin community kind of speaks to that.”
Prodromos says that the problems facing Bitcoin and other cryptocurrencies are the same kind of problems faced with any emerging technology — “there’s always going to be this kind of push and pull between government, entrepreneurs and innovators.”