An Open Letter On Bitcoin To Tesla And Elon Musk

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The Bitcoin policy team called on Tesla and Elon Musk to reconsider their position on the environmental impact of Bitcoin.

Dear Tesla and Elon Musk,

In February 2021, Tesla became a leader in Bitcoin by accepting payment along with Microsoft, PayPal, Starbucks, Overstock, and Twitch. As users and supporters of bitcoin, we were clearly disappointed in May when Tesla announced that it would no longer accept bitcoin and would only accept fiat currencies.

Much has been written about the issues of this currency, such as aiding organized crime, untraceability, and the environmental impact of its use. However, while this currency is heavily used for crime, is virtually untraceable, and kills thousands of trees every year, we still think it would be excessive to ban fiat currency entirely. However, we are at a loss as to why there is a double standard for bitcoin.

We are two parties allied to understanding environmental impact:

When Tesla stopped accepting bitcoin, Elon wrote: “Tesla’s mission is to accelerate interest in sustainable energy. We cannot be the company that does and do not take proper care about energy use in Bitcoin.” As you know, many Tesla owners are bitcoin holders, and although the Bitcoin community is vast, it includes many who agree with the aforementioned concern. Bitcoin users also want to “speed up […] sustainable energy.” Moreover, many (and even most) believe that “appropriate diligence” is wise regarding the use of bitcoin’s energy.

We are surprised that these arguments are used against bitcoin, as the available evidence shows that bitcoin is in fact accelerating the adoption of sustainable energy. In real time, renewable energy companies often produce more energy than domestic demand, which makes consistently clean energy generation unprofitable and discourages investment in these projects. Research confirms, however, that renewable projects can significantly increase profits by incorporating bitcoin mining into their operations. Since bitcoins can be mined anywhere and at any time, companies can mine bitcoin when network demand is met and energy prices are low, and sell energy when demand is positive. This allows renewable energy operations to make money when they are otherwise unprofitable, spurring increased investment in renewable technology and accelerating the research and development needed to make renewables as cheap as possible. In this way, Bitcoin could be one of the most important technologies to help expand clean energy.

Moreover, a lot of things, like the Tesla cars themselves, consume huge amounts of energy; We decide whether this energy use is worth it based on the benefits it provides. Bitcoin only works if the benefits of the technology outweigh the costs, and side-by-side understanding of the true environmental impact of the technology allows us to perform a cost-benefit analysis appropriately.

Given the Bitcoin community’s intertwined interest in environmental issues, we are allied in “appropriate jurisprudence on Bitcoin energy use.” It is difficult to conduct a quality analysis of the environmental impact of Bitcoin. As a result, the current mainstream literature on environmental questions is highly problematic, stemming from misunderstandings about bitcoin, and usually with inflammatory and misleading headlines. But the evidence seems to suggest that while both Tesla cars and Bitcoin use energy, both technologies are good for the environment.

Energy Mix Rating

In July 2021, Elon Musk stated as a rationale for their decision to suspend the payment, “I wanted a little bit more due diligence to confirm that the percentage of renewable energy use is likely 50% or higher, that there is a trend towards increasing that number, and if that is the case, it will resume Tesla accepting bitcoin.”

It’s a bit ironic that Tesla is very concerned about bitcoin’s power supply. According to the best available research, Bitcoin’s energy mix is ​​already about 56% renewable, compared to about 20% for the average US energy consumption. With more than 80% of Tesla charging done at home, does that mean Teslas should be suspended until the energy people use to charge it is more than 50% renewable? not hope.

The percentage of renewable energy that Bitcoin uses is also spurred to increase rapidly. In March 2021, Bloomberg New Energy Finance found that “Renewables are the cheapest energy option for 71% of global GDP and 85% of global power generation. It is now cheaper to build a new solar or wind farm to meet the growing demand for electricity or replacing a retired generator, than building a new fossil-fuel power plant….on a cost basis, wind and solar power are the best economical option in markets where there are fixed generation resources and high demand.” Given that bitcoin mining trends toward the most affordable form of energy available, anywhere in the world, and that the cheapest energy is often renewable energy, it makes sense that the energy mix of bitcoin will continue to move toward renewables.

Bitcoin’s environmental impact needs more research:

The fundamental question about the environmental impact of Bitcoin is a reasonable question that needs further analysis. We might assume that practical questions, and questions that have not received primarily research attention, would include: (1) What is the environmental impact of the overall Bitcoin network of action? (2) What is the increasing impact of bitcoin transactions? (3) What is the environmental cost of holding bitcoin (for those who hold their bitcoin with a provider like Gemini)? and (4) in what ways does Bitcoin positively impact the environment?

For each analysis, the correct analysis means not only that “Bitcoin uses as much energy as XYZ” but contextual information such as: (a) What is the delta in the energy use of bitcoin versus both the fiat currency equivalent and gold? (b) What type of energy is used? (c) When is energy used (given the duck energy use curve)?

Initial example methodology

Current research on these topics, albeit limited, indicates that the environmental impact of Bitcoin is greatly exaggerated. Most research on the environmental impact of bitcoin assumes that there is no basis for electricity or the environmental cost of fiat currency and financial systems; However (among other examples) until fairly recently, checks were often loaded onto planes around the country before they were cleared. A large portion of bitcoin transactions take place across borders, which is not only expensive in paper dollars, but also resource intensive.

Tesla should also sympathize with this situation as criticism circulates over Tesla’s power mix.

Our suggestion:

To be most effective in getting to the heart of this question and convincing Tesla and other future vendors and policymakers in Washington of the power of the findings, we suggest that this research be conducted by those with strong environmental credentials to get to the bottom of the problem with findings that resonate far from the norm. Existing Bitcoin Users. We know that Tesla has access to such institutions and can help our coalition include environmental groups. It’s time to get firm answers about it.

We, the undersigned, are founders of a new initiative advocating public policy for Bitcoin. Let’s develop a robust methodology for analyzing this topic, build publicly, develop a research alliance with strong environmental merits, and get to the heart of the problem with a research project that formally answers this question.

All Bitcoin users should know the carbon dioxide impact of their use and be able to deal with sellers like Tesla. They should know the CO2 effect of using the dollars, too.

sincerely,

Derek Khanna, Grant McCarty and David Zell

Bitcoin Magazine Policy Team

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