Elon Musk has been one of the most public advocates of cryptocurrency, regularly posting about it on Twitter. Musk even said that Tesla had purchased $1.5 billion in Bitcoin, and announced--on Twitter, of course--that you could use the currency to buy a new car.
You can now buy a Tesla with Bitcoin-- Elon Musk (@elonmusk) March 24, 2021
At the time, I argued that the move didn't really make a lot of sense. The biggest problem was that the only reason anyone would buy a Tesla with Bitcoin is if they were betting against the cryptocurrency. If you think the value is going to decrease, using it to buy an expensive electric vehicle might look like a good deal.
On the other hand, if you think Bitcoin's value is going to continue to climb, a belief likely held by anyone with enough of it to buy something as pricey as a Tesla, there's no way you'd use it for that purpose. You'd hold on to it.
Using it to buy a Tesla would--if the value continues to rise--end up being very expensive. There are plenty of stories of people who made ordinary purchases years ago with Bitcoin that would now be worth thousands, or even hundreds of thousands of dollars today.
For Tesla, the opposite is true. The only reason to accept Bitcoin is if the company thinks the value is going to continue to appreciate.
There was another reason I mentioned why this seemed like a strange move for Tesla. Why would a company whose entire mission is to "accelerate the world's transition to sustainable energy" link itself with something that consumes roughly the same amount of energy every day as all of Sweden?
Now, it appears Musk agrees. In a statement, also posted to Twitter, Musk explained the move this way:
We are concerned about rapidly increasing use of fossil fuels for Bitcoin mining and transactions, especially coal, which has the worst emissions of any fuel. Cryptocurrency is a good idea on many levels and we believe it has a promising future, but this cannot come at a great cost to the environment.
Which, is true, but not exactly new information. Then again, Musk followed up with a Tweet that highlighted a chart showing the exponential growth of Bitcoin's energy consumption, so perhaps it finally got to a point that was no longer sustainable for the company, no pun intended.
Musk did say that Tesla won't be selling any of its share of Bitcoin, and plans to resume using it for transactions once mining moves to renewable energy solutions. In that sense, perhaps this change of heart is entirely in line with the companies values.
If Musk can move the value of Bitcoin just by tweeting about it, perhaps he can help encourage it to solve one of its biggest flaws in a similar way. In fact, maybe it's not so bad, after all.