Tesla announced Monday it had bought $ 1.5 billion worth of Bitcoin, which boosted the entire cryptocurrency sector. However, some criticized the move because of the additional financial risk it placed on the automaker.
Today the BBC joined in the criticism, saying it undermined Tesla’s green cards.
“Critics say the electric car maker Tesla’s decision to invest heavily in Bitcoin is undermining its environmental image.”
The BBC article pulls data from research by the Cambridge Center for Alternative Finance. Her work estimates that Bitcoin mining uses more electricity than Argentina for over a year.
“Cambridge researchers say it uses about 121.36 terawatt hours (TWh) per year – and is unlikely to fall unless the currency’s value goes down.”
Tesla comes under fire from the BBC
Unfortunately, as is often the case with mainstream media coverage of cryptocurrency, there are some minor misunderstandings in the article. This compromises the underlying message of the piece.
One example concerns the block-writing process, which the author compares to a lottery where miners occasionally receive small amounts of Bitcoin. However, a more fitting analogy describes Bitcoin as a race in which the winner always receives 6.25 BTC.
“As a reward, miners occasionally receive small amounts of Bitcoin, which is often compared to a lottery.
Additionally, the article quotes blockchain writer David Gerard, who highlights some derogatory points regarding the leading cryptocurrency, including its waste. He also criticizes Musk by saying he used $ 1.5 billion in tax dollars to buy bitcoin. On top of that, BTC miners mainly use coal to power their mining equipment.
“Elon Musk threw away a lot of Tesla’s good work promoting the energy transition. This is very bad … I don’t know how he can effectively reverse this.
Tesla received $ 1.5 billion in environmental grants in 2020, funded by taxpayers. It turned around and spent $ 1.5 billion on Bitcoin, which is mostly mined using electricity from coal. Your subsidy needs to be checked.
Research shows Tesla has received $ 2.4 billion in government and federal grants since 2007. But nothing since 2015. The company also took out an Advanced Technology Vehicles Manufacturing (ATVM) loan for $ 465.5 million in 2010, which was repaid in full with interest before the set term.
For comparison, Ford received $ 33.49 billion in government and federal grants. They also borrowed $ 5.9 billion under the ATVM program and have yet to repay that.
The truth about Bitcoin’s trust in coal
The Bitcoin Energy Consumption Index (BECI) gives a different view of Bitcoin’s energy profile. It is claimed that 70% of Bitcoin miners are based in China, with most of the miners being found in Sichuan Province.
Of the 104 large power plants listed in the province, 9 are coal-fired, 1 gas-fired, 1 pumped storage, 1 wind power plants and 92 hydropower plants.
Regarding waste, said Dan Held, Director of Business Development at Kraken:
“Bitcoin is a super commodity that is shaped from energy, the basic commodity of the universe. PoW converts electricity into digital gold. The fact that PoW is “expensive” is a feature, not a bug.“
Misunderstandings about Bitcoin’s energy profile offer critics an opportunity for attack. In reality, however, it’s greener than most people think.
