To what came as a great surprise to the entire crypto community, Tesla, Block, and Blockstream have just announced that they will be mining Bitcoin using Tesla solar arrays in Texas. As a proof of concept, they show the world that Bitcoin mining doesn’t add to a climate crisis. The road leading up to this has been interesting. Let’s talk a look at what happened.
— Block (@blocks) April 8, 2022
It all started in February 2021, when Tesla announced in an SEC filing that it had purchased $1.5 billion worth of bitcoin to diversify and maximize returns on its capital and said it would start accepting Bitcoin as a payment method for its products. The news exhilarated the crypto markets, and for the next few months, the prices of most cryptocurrencies saw a rise, leading to a leg up in the crypto bull market.
However, shortly after, disaster struck.
In March 2021, Tesla made a U-Turn and said they would suspend Bitcoin payments for their products due to the harmful environmental impact of Bitcoin mining on the climate. The announcement came as quite a surprise in an unexpected tweet from Tesla CEO Elon Musk himself.
Tesla & Bitcoin pic.twitter.com/YSswJmVZhP
— Elon Musk (@elonmusk) May 12, 2021
After Musk’s tweet, Bitcoin fell by more than 10%, while Tesla shares also dropped. So, many were wondering if Tesla’s CEO is a master manipulator of markets?
On Twitter, some accused Elon of manipulating the crypto markets for his and Tesla’s benefit through sentimentally good and bad tweets, pumping and dumping prices in an unregulated industry. Whereas many others seemingly understood that this was merely a company making a decision based on its core values.
During a virtual panel discussion hosted by the Crypto Council for Innovation, Musk stated that he noticed Tesla’s decision caused an increased demand for Bitcoin. As a result, Bitcoin hash rates in some areas of China – regions notorious for high coal consumption for energy production – had massively increased. He deemed that Tesla had made the wrong decision that put the environment at risk.
Even though known predominantly as a car manufacturer, Tesla is also an energy company that produces and manufactures batteries and solar panels. Their mission statement, after all, is “to accelerate the world’s transition to sustainable energy”.
“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… but this cannot come at great cost to the environment.”
However, he mentioned that Tesla would not be selling any of its Bitcoin and intended to use it for transactions when the Bitcoin mining energy consumption reached at least 50% renewables.
Jack Dorsey, Block CEO and the ex-CEO of Twitter, also attended the Crypto Council for Innovation virtual discussion. He had invited Elon Musk to the debate to assure him of the positive developments that Bitcoin mining was making and talk about the road ahead and what they could do to help. Dorsey is well known in the crypto community as a great Bitcoin advocate. His current company, Block, is working on making a portable and user-friendly hardware cryptocurrency wallet to try and make crypto more accessible to the average person.
Not too long after the discussions took place, Michael Saylor, Microstrategy CEO, set up the Bitcoin Mining Council as a voluntary and open forum of Bitcoin miners committed to the network and its core principles.
As stated on their website:
“We promote transparency, share best practices, and educate the public on the benefits of Bitcoin and Bitcoin mining.”
Elon Musk agreed to chat with the Bitcoin Mining Council about the use of renewables for Bitcoin mining, keeping a close eye on the energy usage stats.
Since the Bitcoin Mining Council was established, there has been significant progress. Fast forward to 2022, Tesla, Block, and Blockstream are teaming up to mine Bitcoin off a solar and battery-powered Bitcoin mine in Texas. Tesla’s 3.8 megawatts solar PV array and 12 megawatt-hours Megapack will power the facility.
The project aims to be a “proof of concept for 100% renewable energy Bitcoin mining at scale,” as stated by Blockstream co-founder and CEO Adam Back.
“People like to debate about the different factors to do with Bitcoin mining. We figured, let’s just prove it. Have an open dashboard so people can play along, maybe it can inform other players to participate… This is a step to proving our thesis that Bitcoin mining can fund zero-emission power infrastructure and build economic growth for the future,” said Back.
Cryptocurrency mining is shifting towards a more sustainable and greener future. This means that you don’t need to use dirty power sources to mine Bitcoin. A lot of energy is wasted at power generation plants with high output, like hydroelectric waterfall plants or wind farms. This is due to the excessive generation of energy which cannot be consumed entirely by locals.
For example, a waterfall is not something you find in a city where most power consumption occurs. Locals of these remote locations use far less energy than is produced. As a result, renewable energy generation companies are not maximizing their profits and hence cannot expand at the speed they could, as if they were selling all their energy.
Bitcoin mines can be set up in any environment, no matter how remote they are. In this way, all the green energy produced in remote locations could be used on the spot, making the power companies more efficient in terms of revenue. Furthermore, this revenue could be used in setting up more green plants. A snowball effect will happen in the renewable energy sector.
So overall, one could make the point that Bitcoin mining could help with climate change if done correctly. Let us know your thoughts in the comments below and what you think about Tesla, Block, and Blockstream’s move.