Mining the cryptocurrency requires a staggering amount of energy—contributing to global warming and providing little public benefit.
Emily Atkin/December 5, 2017
MAY 2021 UPDATE:
It’s a dark day on meme street. Elon Musk, one of Bitcoin’s high priests, seems to have turned against the cryptocurrency, sending its value tumbling more than 10 percent and calling into question an economic model that had depended on the public support of megamoguls to keep crypto prices frothy.
Here’s how the betrayal went down. On Wednesday evening, Musk, who in recent months has been a manic booster of the cryptocurrencies Bitcoin and Dogecoin, tweeted an announcement that Tesla would no longer be accepting Bitcoin for vehicle purchases.
“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,” wrote Musk. He then praised cryptocurrency as “a good idea on many levels” that needs reform to make it more environmentally sustainable. Tesla, he concluded, was “looking at other cryptocurrencies that use <1% of Bitcoin’s energy/transaction.” About 12 hours later, Musk posted a screenshot of Bitcoin energy usage from the Cambridge Bitcoin Electricity Consumption Index, a widely used tool that tracks Bitcoin’s nation-state-level energy consumption. He called the trend in energy usage “insane.” (Musk’s environmental record—he’s a jet-setting, lithium-mining billionaire who launches cars into space and whose rocket debris is becoming a pain for Texas activists—was always built on hypocrisy.)
This mea culpa represents a dramatic, even bizarre reversal for Musk, who has spent months praising Dogecoin and Bitcoin—he recently bragged that SpaceX is launching a Doge satellite that will orbit the moon—communing with fellow influencers like Jack Dorsey, and generally serving as a hype man for any crypto-infused effort thrown his way. Earlier this year, Tesla purchased $1.5 billion in Bitcoin and promised to allow customers to use the currency to buy cars. But in one brief public statement, Bitcoin lost its most effective, and perhaps most profitable, spokesman. (Musk’s briefly stated interest in finding less energy-intensive currencies may also pose a threat to Bitcoin’s market preeminence.)
Bitcoin influencers have waged a vigorous campaign over the last year to paint the cryptocurrency as environmentally friendly. In op-eds, white papers, and cable news briefs, it’s been called a battery, a way of consuming excess electricity, a catalyst for building renewable energy infrastructure, and various other convoluted explanations that amount to Bitcoin being good for the environment, rather than an annual consumer of electricity on par with the Netherlands. Critics who question these notions and say that Bitcoin’s electrical consumption is simply too great—and likely to keep increasing without enough attendant utility—are in turn dismissed as dishonest or simply too dumb to understand.
In a more honest culture, this would be a moment of reckoning for those who deny that Bitcoin is an environmental calamity beyond salvage. But those invested in Bitcoin have too much to lose. The cryptocurrency’s market cap has hovered near $1 trillion recently. It’s not just 28-year-old crypto paper-billionaires who have fortunes on the line; many everyday people have bought in. If Bitcoin ever collapses, it will go down with its most fervent supporters saying they still believe. It’s the rest of us—including one of the world’s richest men—who can’t see it for what it is.Jacob Silverman @SilvermanJacob
Jacob Silverman is a staff writer at The New Republic and the author of Terms of Service: Social Media and the Price of Constant Connection.