Sure thing you’ve heard from the news that the Tesla company has bought Bitcoin for over $1,5 billion. In this fashion, Elon Musk, CEO of Tesla Motors, announced on his Twitter profile the possibility of purchasing electric cars with cryptocurrency. However, a month passed, and Elon ate humble pie: Tesla had stopped accepting Bitcoin payments due to fears about the “exponentially growing utilization of energy for Bitcoin mining, which harms the environment”. Why is it so? We have made an investigation, and here is what we have for you.
Tesla Motors vhicles
Who hasn’t heard about Tesla cars! Many people dream of owning one of the finest models of Tesla. Tesla Motors is a company that manufactures eco-friendly electric automobiles. To date, Tesla invites you to buy one of four models of their cars: Model S, Model X, Model Y, and Model 3. All cars are powered by modern electric batteries. It makes them possible to charge at any public station.
Tesla has demonstrated that electric cars can be attractive, incorporating exceptional efficiency and outstanding cosmic interiors with a functional driving range. Namely, the Model X crossover can indeed seat up to seven people. This automobile is known as the most pricey Tesla, with its distinctive Falcon Wing doors. Also, Tesla offers two types of sedans. The significantly bigger and more costly Model S is a mustang, allowing it to gain a speed of 60 mph in 2.8 seconds. Compared to the previous vehicle, The Model 3 is a smaller, less expensive car but isn't far behind Model S: in 3.5 seconds, it reaches 60 mph.
So what was basically the reason Elon Mask decided to deny the purchase of Tesla cars for BTC? As the cars powered by electricity support the policy of environmental-friendly vehicles, buying them for Bitcoin, which harms nature, contradicts the principles. According to his tweet, Elon believes that crypto has a promising future. However, Bitcoin mining harms the environment. Thus, the company won’t accept Bitcoins until the currency finds other energy sources.
The reason for Tesla's refuse to accept BTC: Bitcoin footprint
Statistics show that digital asset mining consumes more energy than Switzerland each year. Furthermore, the process leaves a Carbon Footprint of 46.48 Mt CO2 per year. In comparison, one financial transaction generates 427.92 kg CO2, which is comparable to 71,320 hours of YouTube viewing!
We could also make a comparison of the ecological footprint of gold and bitcoin mining. For each Bitcoin mined, 123 tonnes of CO2 are generated. Mining of gold that is worth 1 BTC emits 24 tons of CO2 into the atmosphere.
Hence, the reason Musk perturbs the environment is clear. Noteworthy, Tesla hasn’t refused to accept virtual currency at all. He stated that the company is also searching for other virtual currencies which use only 1% of Bitcoin's energy per transaction.
In reality, Bitcoin is used in more and more services as a payment method. Let’s discover whether it worth investing in.
Bitcoin as a payment method
BTC was the first cryptocurrency that appeared in the world. A group of unknown people, named Satoshi Nakamoto, one day in 2008 launched the site blockchain.com, placing there a whitepaper describing a secure peer-to-peer paying system. Since then, Bitcoin was born. It revived periods of constant fluctuations. In the beginning, only a few people had no doubt it’s a good investment. However, with time more and more communities got interested in the new fast ways of payment and thus digital assets started gaining popularity. The new cryptocurrencies - altcoins (other than Bitcoin) - sprung up in the financial arena.
Also, this may be true that it’s pretty challenging to find sites and services where BTC is accepted as a payment method. Bitcoin, like many other digital currencies, is still little used for commercial transactions in advanced economies, owing to its price fluctuations and comparatively expensive and slow processing times.
As a matter of fact, Bitcoin seems to be a good investment in case you are into technical analysis, and you know for sure it could bring you profit. However, the price can not only rise unexpectedly but also fall despite all the signs that the situation would be the opposite. So always be aware that you can both get profit and losses.
Thus, BTC is not the only virtual currency. So what are the advantages and disadvantages of crypto?
Pros and cons of virtual currency
If you have never had dealings with cryptocurrency, you may need to know some strong points and drawbacks of this asset. Let’s have a closer look at them together.
- Anonymity. Taking into account that Bitcoin is a decentralised currency, in other words, not controlled by the government, transactions cannot be tracked, and the identity remains hidden.
- Speed. All the financial operations that proceed on the blockchain are peer-to-peer. It means that you don’t need to wait for the approval of third parties in order to make a transaction. The funds are sent directly to the recipient.
- Reduced fees. While purchasing something for digital assets, you don’t pay banking fees. However, mind that all cryptocurrency exchanges have their own fees (which are much lower than the bank ones).
- Convenience. People who cannot access bank systems and get credit/debit cards are allowed to proceed with crypto transactions at Bitcoin marketplaces.
- Extra income. In case you have a digital currency, you may trade it in order to get profit on the difference of prices.
- Volatility. The virtual currency market changes every second, and the price could jump higher or fall much lower than it was some minutes ago. No one is prevented from the frequent price fluctuations, which could lead to losses.
- Scams. Even though blockchain technology is supposed to be highly secure, some crypto exchanges are not reliable enough to keep your funds safe from hacker attacks.
- Acceptance. There is a limited amount of services accepting digital assets as a payment method.
- Energy consumption. The main drawback of Bitcoin mining is that it has an effect on the environment.
To sum it up
Nowadays, with all the hustle and bustle around cryptocurrency, everyone wants to have some amount of digital assets. Like all other payment methods, virtual coins have positive and negative sides. Even though Elon Musk forbade buying Tesla for BTC, you can always purchase cars for fiats.