Story at a glance
- Bitcoin stock jumped after Elon Musk said Tesla would accept the cryptocurrency as payment, provided Bitcoin mining ran on clean energy.
- Mining Bitcoin is done on specialized computer rigs and consumes large quantities of electricity.
- Musk stated that Bitcoin could be a viable currency for Tesla purchases if it ran on roughly 50 percent clean energy.
Bitcoin stock rallied on Monday following comments made by Tesla CEO Elon Musk that recast the cryptocurrency as a viable form of payment for the electric car company.
Tweeting in response to an article on Sunday, Musk said that if Bitcoin mining operations rely on about 50 percent of clean energy, Tesla will once again accept Bitcoin transactions as payment for company products.
This is inaccurate. Tesla only sold ~10% of holdings to confirm BTC could be liquidated easily without moving market.— Elon Musk (@elonmusk) June 13, 2021
When there’s confirmation of reasonable (~50%) clean energy usage by miners with positive future trend, Tesla will resume allowing Bitcoin transactions.
The reversal comes after Musk announced Tesla would suspend accepting Bitcoin as payment in transactions due to the heavy dependence on fossil fuels to mine and source the cryptocurrency. The Cambridge Bitcoin Electricity Consumption Index estimates that the annual electricity consumption sits at roughly 11.33 gigawatts.
Musk’s comments led to skittish investors selling their shares en masse, causing Bitcoin’s stock to plummet.
A comparison researchers make to underscore the magnitude of electricity consumption notes that the amount of electricity consumed by Bitcoin mining operations in just one year could power all the tea kettles in the U.K. for 22 years.
This is due to the daunting nature of mining — or obtaining — bitcoins, which require users to solve and create new and complex transactions in the Bitcoin blockchain. Even after the lengthy work of processing scores of Bitcoin transactions, users are not necessarily awarded a Bitcoin in the process.
Musk’s comments have reassured investors that the cryptocurrency has purchasing power, ushering its stock to increase by nearly 8 percent to $40,279.24 as on June 14.