In May 2021, Elon Musk caused disaster when he announced on Twitter that Tesla would not accept Bitcoin payments to buy its cars.
The killer tweet came just over three months after the electric car maker announced that it would accept bitcoin and invest in bitcoin.
“Tesla has stopped buying cars with Bitcoin,” the billionaire said on May 12, 2021. We are concerned about the rapid increase in the use of fossil fuels for bitcoin mining and transactions, especially 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 a huge cost to the environment (…) We are also looking at other cryptocurrencies that are using
big change
On that day, bitcoin prices collapsed by more than 20%.
But what is most worrying about the cryptocurrency space is that Musk’s message will highlight the environmental impact of cryptocurrencies. From that moment on, the media began investigating the power consumption of the process of validating transaction blocks on the Bitcoin blockchain and other blockchains. This process is called Proof of Work.
Researchers have found that most blockchains consume significantly more power than many countries. The timing was bad because all of this came at a time when the young industry was trying to attract beyond its aficionados.
All this is not good for cryptocurrencies that present themselves as a revolutionary technology of the future. How does it belong to the future when one participates in polluting the planet? This is a question that has been holding back the coding space for several months now.
One consequence is that some institutional investors have preferred to remain on the sidelines for fear of being accused of violating ESG – the common acronym in business circles.
The wait will soon be over as Ethereum, the No. 2 blockchain behind Bitcoin, has just successfully completed a software update that will reduce power consumption by 99.95%. This feat was achieved by changing the way things are done. Basically, transactions will now be validated by a new mechanism, Proof of Stake, which does not require the use of multiple computers at the same time with Proof of Work.
to feel comfortable
It’s not as technical as it seems. What crypto enthusiasts want to tell us is that we can now invest in Ether, the original token of Ethereum, buy and create non-fungible tokens (NFTs) or take out a loan via a crypto company with a clear conscience since the CO2 platform has significantly reduced emissions.
Ethereum makes it possible to reconcile climate change advocacy with cryptocurrency. Investing in projects that run on Ethereum is about being a friend of the planet. Basically, the cryptocurrency investor is socially conscious as well. There is no doubt that hesitant and cautious institutional investors now have a good excuse to get into cryptocurrencies. It is elegant and responsible for a Dinner in the City to say that they are investing in an innovative and environmentally friendly asset.
If all of this makes us feel good, the problem is that Bitcoin, a rival to Ethereum, will continue to operate like never before. So it’s really hard to believe that the crypto space will suddenly become green while Bitcoin (BTC), which accounts for 37.4% of the crypto market, according to data firm CoinGecko, continues to consume a lot of energy.
