The Tesla and Bitcoin drama has been unfolding over the last few months. Like a bad (or good) celebrity relationship, the initial coming together of the two tech “disruptors” was met with instant controversy.
Tesla began accepting Bitcoin as a purchase method for its cars in February 2021, after the company announced it had purchased $1.5 billion (U.S.) of the cryptocurrency. A few short months later, on May 12, Tesla decided to stop accepting Bitcoin, with founder Elon Musk citing what many critics of the relationship had highlighted — Bitcoin’s reliance on fossil fuels and impact on climate change.
“We are concerned about rapidly increasing use of fossil fuels for Bitcoin mining and transactions, especially coal, which has the worst emissions of any fuel,” Musk wrote on Twitter.
There are some internet whispers that Tesla may reverse its decision in the near future. Musk himself has praised the concept of cryptocurrency and said that Tesla intends “to use (cryptocurrency) for transactions as soon as mining transitions to more sustainable energy.”
That would be a bad call. Not just for the image of electric vehicles (EVs), but possibly for the entire planet. You’ve probably heard some criticism of Tesla or lithium-ion battery-powered electric vehicles as a whole. Besides concerns such as range, charge and cost to run, many EV critics often boast that these vehicles are no more eco-friendly than the average fossil fuel-powered cars — and in some cases might even be more carbon-intensive over the course of their lifespan.
Most of the criticism is based on two points. The first is the sourcing and refinement of the lithium for the batteries, which is a carbon-intensive process, and the second is the source of the electricity to charge the vehicles — if you have to burn coal to make electricity to power your car, it’s not exactly “green.”
These are arguments we’ve all been hearing for the last decade. But while they held merit back in 2010, they hold very little now. As EV manufacturing has scaled, battery production has become localized and EVs are charged primarily through renewable sources such as hydroelectricity and nuclear power, the data collected over the past three years has been overwhelmingly positive for EVs and their carbon footprint versus traditional vehicles.
In 2020, studies from the universities of Exeter, Nijmegen (in The Netherlands) and Cambridge showed that in 95 per cent of the world, driving an electric car was better for the climate than one powered by fossil fuels. For example, if you purchased a new Nissan Leaf EV in the U.K. in 2019, it would have lifetime emissions (that’s the manufacturing of the car, plus driving 150,000 km) around three times lower than the average new gasoline-powered car.
This has been true in other countries which have seen wide-spread EV adoption, such as Norway and France, where nearly all electricity comes from carbon-neutral sources, such as hydroelectric or nuclear.
It is true that around 50 per cent of an EV’s carbon footprint is down to the manufacturing process alone. However, the carbon intensity of battery manufacturing has decreased as it becomes more localized and the factories themselves become reliant on renewable sources, such as the Tesla “Gigafactory.”
Independent studies, such as the one done by Carbon Brief, now conclude that the average EV produces between 100 to 150 grams CO2-equivalent per kilometre (assuming 150,000 kms driven over the vehicle lifetime) while the average fossil fuel-powered European car is somewhere around 250 grams CO2-equivalent per kilometre.
This is all to say that now that EVs are beginning to fulfill their mission of reducing carbon emissions, allowing payment through a fossil fuel-reliant currency would be a huge step backward.
Bitcoin is bad for the environment and its use should be limited — particularly by anyone at least claiming to have a mind toward lowering carbon emissions. In 2019, a study in the scientific journal Joule found that Bitcoin production is estimated to generate between 22 and 22.9 million metric tons of carbon dioxide emissions a year, which is somewhere between the levels produced by the entire countries of Jordan and Sri Lanka.
In 2020, that number had increased to 36.95 megatons of CO2 annually — a carbon footprint comparable to that of New Zealand and an energy consumption comparable to that of The Netherlands.
Cambridge researchers estimate that Bitcoin now accounts for around 0.5 per cent of total global electricity consumption.
It’s not an exaggeration to say that if Bitcoin continues to grow at this rate, it could be among the most environmentally harmful things human beings have ever invented. There are efforts to make cryptocurrency greener — presumably (and hopefully) what Musk is waiting for before once again accepting it as a form of payment for Tesla.
Projects from Canada to Siberia have proposed Bitcoin manufacturing become reliant on renewable sources such as hydropower and some sustainability experts have suggested companies could buy carbon credits as a way to offset the carbon impact of cryptocurrency. However, the problem really is in the design of Bitcoin.
Bitcoin is created when high-powered computers compete against one another to solve complex mathematical puzzles. It is a very energy-intensive process — and one that, more often than not, relies on fossil fuels, particularly coal, which Elon Musk has correctly pointed out is the dirtiest power source of all.
Higher demand leads to higher Bitcoin prices, which leads to higher demand, which leads to higher prices. Which leads to more Bitcoin miners using increasingly powerful computers to compete against each other, which in turn need more and more and more energy.
By nature, as it becomes more popular, it must consume more energy, making the possibility of “sustainable crypto” unlikely with mass adoption, at least, in the immediate future.
Could things change? Of course. Human beings are clever problem solvers and we’re always coming with ways to improve existing concepts. The very existence of EVs and cryptocurrency are evidence of that. But in 2021, you’d be a pretty big hypocrite to buy your electric car with money from the internet.
Chris D’Alessandro is a writer living in downtown Toronto. Growing up in a family of used car dealers and mechanics, he has been immersed in car culture his entire
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