The electric car maker announcing that it will no longer accept Bitcoin citing environmental concerns raises questions about Tesla’s lack of due diligence, DOGE also being a PoW coin, and how Bitcoin’s truth will fight the environmental hazard meme while setting a “very dangerous precedent.”
Ethereum co-founder Vitalik Buterin wrecked the meme coins on Wednesday, and a few hours later, Tesla CEO Elon Musk ended up wrecking Bitcoin and, by extension majority of the cryptocurrency market.
The electric car maker has announced that it will no longer accept Bitcoin for car purchases, citing environmental concerns, just two months after the company first began accepting the cryptocurrency as payment.
In response to this, Bitcoin prices crashed to $46,000 and dragged Ether to $3,530 soon after hitting a new all-time high at about $4,375.
But that’s to be expected as markets don’t go up in a straight line and constantly experience pullbacks.
Tesla shares also fell 1.25% after hours, down about 23% since mid-April. Trader Loomdart, meanwhile, said this whole situation also looks bad for Tesla, “how little due diligence do they do on stuff.”
Mark Humphery-Jenner, an associate professor of finance at the University of New South Wales, agrees. He said he is more concerned about Tesla management’s “very hasty and precipitous” decision-making.
Let’s pump something else
Musk said that he backed environmental concerns, including the use of “coal, which has the worst emissions of any fuel.”
“Cryptocurrency is a good idea on many levels, and we believe it has a promising future, but this cannot come at great cost to the environment,” he tweeted.
But he is definitely not done with cryptos, rather planning to pump other crypto-assets as he further said, “We are also looking at other cryptocurrencies that use <1% of bitcoin’s energy/transaction.”
In February, Tesla first revealed that it had bought $1.5 billion of Bitcoin before accepting it as payment for cars in March. During the Q1 2021 earnings call, it was revealed that the company had sold 10% of its bitcoin holdings.
While it won’t accept BTC as payment, Tesla will continue to hold its Bitcoin with the plan to use them as soon as mining transitions or more sustainable energy sources.
Just last month, Musk agreed with Square CEO Jack Dorsey on Bitcoin incentivizing renewable energy.
Fighting the meme
Interestingly, Musk’s beloved DOGE, which he is sending to the moon and is accepting for SpaceX’s mission, also runs on a proof-of-work (PoW) consensus mechanism just like Bitcoin. This week, he ran a poll asking people if Tesla should accept DOGE, with over 70% voting in favor.
But of course, people don’t have the same apprehension about the meme coin. As Fiskantes of Zee Prime Capital said, PoW being an environmental hazard is a meme, and “It’s hard to fight memes with truth.”
Mewn21 of eGirl Capital is meanwhile worried about how easy it was to FUD a consensus mechanism.
“Social conditioning is an easier attack vector on “secure” and “stable” networks than I ever anticipated. if u think it ends with PoW ur mistaken,” said Mewn.
“This is a very dangerous precedent being set. PoS attack vectors: supposed cartels and concentration in the eyes of the masses. There’s no end to this depending on the vested interests of the proponents.”
At the same time, Mark Cuban tweeted that his Dallas Mavericks will “continue to accept BTC/Eth/Doge because we know that replacing Gold as a store of value will help the environment and shrinking big bank and coin usage will benefit society and the environment.”
“Elon was getting a lot of questions and criticisms, and this statement allows him to appease critics while still keeping bitcoin on his balance sheet,” said Meltem Demirors, chief strategy officer at digital asset manager CoinShares Group.