He stressed that he doesn’t expect Bitcoin to be “pure as the driven snow.” But as long as mining companies make a “conscious and determined effort” to move toward renewables, Musk says Tesla can support that.
Listening to him speak, there does appear to be a flaw in his logic. He thinks that Bitcoin miners were pushed toward coal because the price increased so quickly that renewable energy sources couldn’t keep up. As Bitcoin’s price increased, so the number of companies mining Bitcoin increased, and so did its carbon footprint.
Unlike coal, it isn’t easy to quickly double or triple renewable energy production. But following Musk’s logic, if Bitcoin’s price rises again, we could find ourselves in exactly the same cycle.
There are so many existing incentives that the International Energy Agency expects wind and solar to account for around 12% of electricity demand by 2030, up from 5% in 2019.Wood says the new research ideas — in a paper by her ARK Investment Management LLC and Dorsey’s Square Inc. — “debunk the myth” that Bitcoin mining is damaging the environment. On Twitter, Dorsey said Bitcoin “incentivizes renewable energy.” Musk responded with one word: “True.”
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But there’s still the fact that the mining devours massive amounts of power. Bitcoin mining now uses 66 times more electricity than in 2015, Citigroup Inc.
said in a recent report.
Musk jack argue bitcoin renewable energy
In a white paper published on Wednesday, Mr Dorsey’s payments company Square and cryptocurrency investor Ark Invest argued that Bitcoin miners are the “key” to increasing the world’s renewable energy capacity by making solar and wind power more lucrative.
Mr Dorsey retweeted the paper with the comment “Bitcoin incentivises renewable energy”, to which Mr Musk replied: “True.” Ark’s chief executive Cathie Wood said the research “debunk[s] the myth that Bitcoin mining is damaging the environment”.
But academics and analysts specialising in renewable power questioned those claims, warning that they relied on dubious assumptions or cautioning that many other technologies could achieve the same goal.
Lucas Davis, a senior professor at Berkeley’s Haas School of Business who studies energy markets, told the Telegraph: “This article vastly overstates the role of Bitcoin…
Musk jack argue bitcoin renewable energy-i
By William Mathis and Lars Paulsson A trio of Jack Dorsey, Cathie Wood and Elon Musk are promoting the idea that Bitcoin mining can be good for the planet actually. That’s not exactly true.
The basis of the idea is that mining crypto currencies uses a lot of power and can be deployed at any time. That could help a developer make money minting coins at a time when there’s lots of wind or sunshine, but not much electricity demand.
Making better use of wind and solar, where power generation can be intermittent, increases efficiency, lowers prices and helps encourage the green transition.
The theory is based on trends that are already happening, regardless of crypto. The cost of renewable power is plummeting and an increasing share of energy is being supplied by electricity.
Musk jack argue bitcoin renewable energy-iv
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Why opt to take Bitcoin payments again?
Musk began hinting in June that Tesla might accept Bitcoin payments if there was evidence of heavy renewable usage. This week, he went a step further: “I think we want to do a little bit more due diligence to confirm that the percentage of renewable energy usage is most likely at or above 50% and that there is a trend towards increasing that number,” he said. “If so then Tesla will resume accepting Bitcoin.”
Musk sees hydro, geothermal, and nuclear as good options for Bitcoin mining.
Musk jack argue bitcoin renewable energy-vi
Indeed, some credit the announcement with starting the bull run that led to Bitcoin’s all-time high of over $64,000 in April.
However, in May, Musk announced it would suspend Bitcoin payments due to environmental concerns. The decision coincided with China’s crackdown on cryptocurrency exchanges and services, and crypto prices began to fall across the board.
Musk explained the decision: “Tesla’s mission is accelerating the interest of sustainable energy. We can’t be the company that does that and also not do appropriate diligence on the energy usage of Bitcoin.”
He also stressed that he — along with Tesla and SpaceX — intended to hold their Bitcoin.
But perhaps the hope is that this time around, mining companies won’t be forced to use coal to fuel the growth.
Can Bitcoin ever be sustainable?
Bitcoin faces a huge environmental challenge. By design, it’s not mined in an energy-efficient way. There are newer more eco-friendly cryptocurrencies with different models that consume a fraction of the energy.
But we can’t easily re-engineer the way Bitcoin works.
Since we can’t reduce its energy consumption, Bitcoin supporters see renewable energy as a solution. Indeed, Square’s CEO Jack Dorsey, who also spoke at the conference, argues that Bitcoin could actually incentivize the use of renewables.
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In order to incentivize renewables further, crypto miners could sign long-term agreements to buy green electricity. That’s what major companies like Amazon.com Inc. do to help cut their carbon footprints. It’s helped fuel a boom in renewable power assets in the U.S.
In their research, ARK and Square proposed that a renewable power project could be built without a grid connection, just to power a Bitcoin operation.
That would speed up development, but also make the project riskier in the eyes of a lender as the grid connection might never materialize, making a development completely dependent on mining.
But part of the rapid decline in the price of renewables has also been thanks to cheap financing.
Square and Ark Invest recently published a paper describing how Bitcoin mining could accelerate a transition to more sustainable energy sources.
One problem that renewable energy companies face is that the times of heavy production (when the sun or wind are strong) don’t always coincide with the times of heavy demand (when people get home from work and put on the TV). The document advocates that if miners worked with renewable energy and storage companies, it could help even out those fluctuations in supply and demand.
On the other side, environmentalists argue that if Bitcoin increases its consumption of renewable energy, it won’t do anything to solve the planet’s carbon consumption problem.
A bank would probably want to charge a higher interest rate on a project that plans to sell power to a Bitcoin miner than it would if the customer were Google.
“I don’t know how you’d assess the risk profile of a Bitcoin mining operation,” said Albert Cheung, head of analysis at BNEF. “You kind of want your offtaker to be around for 20 years, or at least 10.”
For now, lots of Bitcoin is being produced by the most-polluting source of electricity. Research from the Centre for Alternative Finance shows that Bitcoin mining is dominated by China, a country currently driving a boom in new coal plants. In the second quarter of 2020, the latest data available, the world’s biggest polluter mined as much as 65% of the coins.
By comparison, Iceland and other Nordic nations, once seen as a green haven for Bitcoin, were producing less than 1% of the coins each.