An open letter on Bitcoin to Tesla and Elon Musk

The Bitcoin Magazine Policy Team invites 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 the Bitcoin industry by accepting payments alongside Microsoft, PayPal, Starbucks, Overstock, and Twitch. As users and supporters of Bitcoin, we were obviously disappointed in May when Tesla announced that it would no longer accept bitcoin and only accept fiat currencies.

Much has been written on the issues of this currency, such as aid to organized crime, untraceability and the environmental impact of its use. Nonetheless, while this currency is used extensively for crime, virtually unobtainable, and kills thousands of trees every year, we still believe that it would be excessive to ban fiat money altogether. However, we don’t know why a double standard seems to exist for bitcoin.

We are aligned parties in understanding the environmental impact:

When Tesla stopped accepting bitcoin, Elon wrote: “Tesla’s mission is to accelerate the interest in sustainable energy. We cannot be the company that does this and also fail to exercise due diligence on the use of Bitcoin’s energy. . ” As you know, many Tesla owners are bitcoin owners, and although the Bitcoin community is large, it includes many people aligned with the cited concern. Bitcoin users also want to “speed up […] sustainable energy. ”Moreover, many (even most) believe that“ due diligence ”is prudent when it comes to bitcoin’s energy consumption.

We are surprised that these arguments are being used against bitcoin, as the available evidence shows that bitcoin does accelerated adoption of sustainable energy. In real time, renewable energy companies often produce electricity beyond local demand, making continued clean energy production uneconomic and discouraging investment in these projects. To research confirms, however, that revolving projects can dramatically increase profits by integrating bitcoin mining into their operations. Since bitcoin can be mined anywhere and anytime, businesses can mine bitcoin when grid 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 would otherwise not have been profitable, prompting more investment in renewable technologies and accelerating the R&D needed to make renewables so cheap. as possible. In this way, Bitcoin can be one of the most important technologies to help in the expansion of clean energy.

In addition, a lot of things, like Tesla cars themselves, consume huge amounts of energy; we decide whether this energy consumption is worth it based on the benefits it provides. Bitcoin only works if the benefits of the technology outweigh the cost, and understanding the true environmental impact of the technology allows us to do this cost-benefit analysis correctly.

Given the common interest of the Bitcoin community in environmental matters, we are allies of “Bitcoin’s due diligence on energy use”. It is difficult to generate a quality analysis of the environmental impact of bitcoin. As a result, the existing traditional writings on environmental issues are highly problematic, result from misunderstandings about bitcoin, and generally have inflammatory and misleading titles. But the evidence seems to indicate that while Tesla vehicles and bitcoin use energy, both technologies are good for the environment.

Energy mix assessment

In July 2021, Elon Musk explained as the rationale for his decision to suspend payments: “I wanted a little more due diligence to confirm that the percentage of renewable energy use is most likely equal to or greater than 50%, and that there is a tendency to increase that number, and if so, Tesla would start accepting bitcoin again. ”

It’s a little ironic that Tesla is so concerned about Bitcoin’s energy sources. Bitcoin’s energy mix already exists, according to the best available research 56% renewable, compared to approximately 20% for the electricity consumption of the average American. Because over 80% of Tesla charging is done at home, does that mean Teslas should be put on hold until the energy people use to charge them is over 50% renewable? We hope not.

The percentage of renewable energy used by Bitcoin is also prompted to increase rapidly. In March 2021, Bloomberg New Energy Finance found that “renewable energies are the cheapest energy option for 71% of global GDP and 85% of global electricity production. It is now cheaper to build a new solar or wind farm to meet the growing demand for electricity or to replace a build a new fossil fuel power plant. … On a cost basis, wind and solar are the best economic choice in markets where there are firm production resources and where demand is increasing. more affordable available, anywhere in the world, and that the cheapest energy is most often renewable energy, then logically, Bitcoin’s energy mix will continue to move towards renewable energies.

Bitcoin’s environmental impact requires more research:

The fundamental question about the environmental impact of bitcoin is a reasonable one that requires further analysis. We would postulate that operational questions, and those that have received virtually no research attention, would include: (1) What is the environmental impact of the global bitcoin network to be mined? (2) What is the incremental impact of bitcoin transactions? (3) What is the environmental cost of keeping your bitcoin (for those who keep their bitcoin with a provider like Gemini)? And (4) In what ways does bitcoin positively impact the environment?

For each analysis, a proper breakdown would not just say “bitcoin uses as much energy as XYZ” but contextual information such as: (A) What is the delta of bitcoin’s energy consumption relative to equivalent in fiat currency and gold? (B) What type of energy is used? (C) When is the energy used (given the duck’s energy consumption curve)?

Methodology of the initial example

The existing, albeit limited, research on these topics indicates that The environmental impact of bitcoin is vastly overestimated. Most research on the environmental impact of bitcoin assumes that there is essentially no electrical or environmental cost to fiat currency and financial systems; yet (among other examples) until fairly recently, checks were often loaded on planes across the country before clearing customs. A large portion of bitcoin transactions are cross-border, which, in fiat dollars, is not only hugely expensive, but also resource intensive.

Tesla should also sympathize with this situation as criticism of Tesla’s energy mix is ​​widespread.

Our proposal:

To be more effective in getting to the bottom of this question and convincing Tesla, other future suppliers and policymakers in Washington of the robustness of the results, we suggest that this research be conducted by those with strong environmental credentials to achieve the the root of the problem with results that resonate well outside the existing Bitcoin user base. We know Tesla has access to such institutions and can help our coalition include environmental groups. It is time to get some firm answers on the subject.

We, the undersigned, are co-founders of a new initiative advocating public policies for bitcoin. Let’s develop a robust methodology to analyze this topic, build in public, develop a research coalition with strong environmental convictions, and get to the bottom of the problem through a research project that authoritatively answers this question.

All Bitcoin users should be aware of the impact of their use on carbon dioxide and be able to deal with vendors such as Tesla. They should also know the impact of carbon dioxide from using dollars.

Truly,

Derek Khanna, Grant McCarty and David Zell.

This is a guest article by Derek Khanna, Grant McCarty and David Zell. The opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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