Has Elon Musk killed Bitcoin? He might have damaged it, and Tesla along with it in a development that’s chock-full of irony. Last night, the world’s most hip billionaire rejected the world’s most hip currency, claiming Bitcoin’s mining operations took too hard an environmental toll.
Pssst. No one tell Musk about lithium:
Tesla & Bitcoin pic.twitter.com/YSswJmVZhP
— Elon Musk (@elonmusk) May 12, 2021
Tesla Inc. will halt sales of cars using bitcoin due to the effects on the environment that cryptocurrency mining can have, Chief Executive Elon Musk said Wednesday, and prices of Tesla shares and the cryptocurrency dropped immediately after. …
Musk did say that Tesla would not sell any of the bitcoin owned by Tesla currently, and would use it again “as soon as mining transitions to more sustainable energy.” In the meantime, he said Tesla will look at other cyrptocurrencies that use less energy to mine.
Bitcoin prices fell as much as 14%, according to Coindesk data. As of 11:30 p.m. Eastern, bitcoin was down 8.3% at roughly 50,000, off from about $54,700 before the tweet. Tesla shares declined 1.3% in after-hours trading.
Why would Tesla stock get impacted to that extent? In part because the move undermines the company’s own financial structure, which the “Technoking” had to see coming:
Tesla purchased $1.5 billion worth of the cryptocurrency in early February, after Musk signaled his interest in bitcoin on his Twitter account. Soon after, Tesla officially told the SEC that Musk had a new title of “Technoking” and Chief Financial Officer Zach Kirkhorn would henceforth be known as Tesla’s “Master of Coin.”
But that’s only a small part of the irony here. It’s not as if Musk is wrong about the environmental impacts of crypto-mining. CBS News takes a look at the power drain these “mining” projects require, and it’s massive:
Customers will no longer be able to buy their Teslas in bitcoin after Elon Musk announced yesterday the company will stop accepting the cryptocurrency because of its environmental toll.@errolbarnett explains. pic.twitter.com/QAp7CLv1Gv
— CBS This Morning (@CBSThisMorning) May 13, 2021
In other words, there’s no doubt that Musk has a point. Bitcoin mining uses vast amounts of electricity, which mainly comes from coal and natural gas. But where does the energy come to recharge Teslas? It comes from the same sources, which is why this is a rather ironic complaint coming from a manufacturer of electric vehicles. More Teslas on the road means the necessity of more electricity generation, and from scalable resources to deal with unpredictable demand — which eliminates wind and solar, as we have seen in California and Texas. Either we start building a whole lotta nuclear plants, or we’d better keep mining coal and natural gas. This is the hypocritical conceit of the entire EV industry, not just Musk, but he’s certainly expressing it here.
However, there’s another level of irony in this move too. Musk is complaining about the environmental impact of virtual “mining” in cryptocurrency generation. What about the actual mining required to manufacture the vast amount of batteries required for Teslas and other EVs? The New York Times finally caught up to that reality last week, and CNN followed up on Monday. We will have to conduct massive mining in the US to keep up with domestic demand for lithium and other rare-earth elements for so-called “green energy” systems, and that won’t be a one-time effort. Batteries wear out and have to be replaced — and the disposal of those batteries will be another massive and ongoing environmental disaster.
Musk is cutting off several noses here to spite his face. And he’s choosing an awfully poor time to start getting picky about environmental issues, both in terms of his investments and in light of the strange new media interest in all the ways EVs and other “green” systems might not be very green at all.