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The crypto market’s recent rally saw Bitcoin set a new record with it traded past $42,000 this week after Tesla revealed that it invested $1.5 billion in BTC. While investors are understandably excited with the cryptocurrency’s sky-high price, environmentalists are also increasingly worried about Bitcoin mining’s negative impact on the environment.
BTC’s price has skyrocketed since last year and is trading at $46,317 at the time of writing based on data from Coinmarketcap. However, environmentalists are concerned that “the rising price offers even more incentive to Bitcoin miners to run more and more machines,” according to BBC.com.
Cambridge University researchers say that crypto mining consumes 121.36 terawatt-hours (TWh) of electricity in one year, a figure that is unlikely to fall unless cryptocurrency prices drop. For comparison, mining consumes more power than the entire country of Argentina.
“Bitcoin uses more energy than Argentina,” the researchers noted. “If Bitcoin was a country, it would be the top 30 energy users worldwide. “
This massive energy consumption, and its equally massive carbon dioxide emission, is a cause of concern for environmentalists. A 2019 study by the scientific journal Joule estimates that Bitcoin production generates between 22 and 22.9 million metric tons of carbon dioxide emissions a year, according to Reuters.
Taking into account Bitcoin mining’s massive carbon footprint, Tesla’s BTC investment has raised concerns from environmentally conscious investors. “We are of course very concerned about the level of carbon dioxide emissions generated from bitcoin mining,” Osmosis Investment Management CEO Ben Dear said. The firm, which specializes in sustainable investing and has $2.2 billion in AUM, also holds Tesla shares.
“We hope that when Tesla’s bitcoin ventures are over, they will concentrate on measuring and disclosing to their market their full suite of environmental factors, and if they continue to buy or indeed start mining bitcoin, that they include the relevant energy consumption data in these disclosures,” Ben Dear added.
There are those who believe that Tesla’s crypto investment is at odds with its stance on sustainable energy. “Elon Musk has thrown away a lot of Tesla's good work promoting energy transition,” David Gerard, author of Attack of the 50 Foot Blockchain, said. “This is very bad... I don't know how he can walk this back effectively.”
In fact, Gerard believes that an investigation might be necessary. “Tesla got $1.5bn in environmental subsidies in 2020, funded by the taxpayer,” he added. “It turned around and spent $1.5bn on Bitcoin, which is mostly mined with electricity from coal. Their subsidy needs to be examined.”
