It has now been more than 3 years since Elon Musk decided to stop supporting Bitcoin as a means of payment for the purchase of electric vehicles at his production company Tesla Motors, highlighting the degrading energy impact of Bitcoin mining.
Today, things seem to have changed significantly, with the crypto becoming notably more eco-friendly to the point of meeting the minimum sustainability criteria previously indicated by Musk himself.
Is there a possibility that Tesla will once again use Bitcoin as a payment currency? We will see it in this article.
Elon Musk, Tesla and Bitcoin: a story of love and hate in 2021
In February 2021, at the dawn of the last bull run, Elon Musk monopolized the market’s attention by announcing a Bitcoin purchase operation by his company Tesla Motors for a total amount of 1.5 billion dollars.
Immediately after the EV car manufacturer began accepting cryptocurrency as a possible payment currency for the purchase of electric cars, initiating an era of expansion of the cryptographic sector within the world of big companies.
The party, however, lasted very little because just 2 months later, in May 2021, Elon Musk decided to backtrack, and stop the integration of Bitcoin into Tesla’s circuits, citing environmental concerns.
In fact, Tesla has always been a company with a vision focused on environmental respect and a mission oriented towards spreading and promoting the culture of renewable energy worldwide.
The process of mining Bitcoin in 2021, according to what was reported by Musk, was using too many fossil fuels and went against the values that had guided the car manufacturer up until then.
Tesla & Bitcoin pic.twitter.com/YSswJmVZhP
— Elon Musk (@elonmusk) May 12, 2021
From that point on, Tesla no longer referred to Bitcoin, and indeed in the second quarter of 2022, in the midst of the bear market, decided to silently sell (at a loss) 75% of the shares purchased the previous year.
As of today, the company still represents the third largest holder of the orange coin, for a total of 9,720 coins purchased at an average cost of 337 million dollars, now valued at 641 million dollars.
Although Tesla has disappeared from the crypto radar without publicly referring to Bitcoin anymore, its founder Elon Musk has addressed the topic several times on X.
In addition to hosting some “Space” where he discussed the topic, and praising the community of other cryptocurrencies such as Dogecoin, Musk at the time explicitly stated that he would reconsider the idea of including Bitcoin as a means of payment in Tesla if its production became sustainable for at least 50%.
This means that at least half of the Bitcoin mining industry should have been powered by renewable energy sources (solar, wind, etc).
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
BTC increasingly eco-friendly: will it be accepted by Tesla again?
More than 3 years after the love and hate story between Musk, Tesla, and Bitcoin, many things have changed. Over time, the pressure from world governments on the miners’ industry to comply with ESG factors and the institutional appreciation of the cryptocurrency has led to a concrete reduction in the commitment to fossil fuels in this much-contested practice.
Furthermore, several technological advancements have been made, making cryptocurrency mining increasingly energy-efficient.
According to what is reported from the graph of sustainable energy use in Bitcoin mining, modeled by the venture capitalist in the field of climate technology Daniel Batten and the data analyst Willy Woo, the sustainability of the crypto is currently at its historical highs around the value of 55%.
This means that more than half of Bitcoin mining is powered by renewable energy sources, with a strong positive trend observed from the second half of 2021 onwards, right after Tesla’s historic U-turn.
Although the minimum sustainability level desired by Musk has been reached, it is not guaranteed that Tesla will resume support with Bitcoin payments.
First and foremost, as noted by the data analyst and researcher at the Vrije Universiteit Amsterdam and De Nederlandsche Bank Alex de Vries, most of the statements about the energy impact of Bitcoin mining lack transparency and verifiability. Here is what he reported in an interview:
“The Bitcoin mining industry loves to talk about transparency until specific data is requested.”
The analyst specified how even the United States Energy Information Administration (EIA) had a somewhat non-transparent direct experience with the mining sector, only to be sued by the giants Riot Platforms and the Texas Blockchain Council.
De Vries argues in particular that the miners have made some “absurd claims” about the use of renewable energy, and believes that Musk is aware of the misleading data.
Alexander Neumüller, ricercatore presso il Cambridge Centre for Alternative Finance (CCAF), crede che le attuali metodologie per ricavare il mix elettrico di Bitcoin siano imprecise perchè si basano su ipotesi piuttosto che dati certi e verificabili.
For example, the Bitcoin Mining Council, an association of miners formed after the issue with Tesla, already claimed in mid-2023 that the sustainable use of electricity by the global mining sector amounted to 59.9%.
The problem is that these data, obviously falsifiable, come from his investigations on miners in North America.
In any case, according to reliable data from the Cambridge Bitcoin Electricity Consumption Index (CBECI), the use of coal has remained fairly stable in recent years, slightly decreasing from 40% to 36%.
From here we can infer that the trend of Bitcoin mining is moving towards an increasingly user-friendly situation, although it is not yet empirically above 50% of energy sustainability.
The analysts at CBECI state that if gas and nuclear were included among sustainable energies, the rate of renewable energy usage by Bitcoin mining would be 63%. However, if both were removed from the equation, the rate would drop to 28%.
In the midst of this imprecise data, Tesla and Elon Musk have not exposed themselves in a decision that would very likely open public debates potentially dangerous for the public image of the electric vehicle manufacturer, always focused on energy sustainability.
It is clear that if the current trend continues undisturbed in the coming years, sooner or later we will have reliable data that certify the surpassing of 50% of renewable energy sources, and in that case Musk will be “forced” to admit it publicly.
If the integration with Tesla should resume and the crypto is readmitted as a means of payment, then we will certainly have a new wave of global attention, with a focus that will very likely shift to speculation, driving BTC towards new all-time highs.