Seemingly everything Elon Musk does makes headlines, and the release of his company’s annual business report on Monday was no exception. Among other findings in the report was the significant reveal that Tesla purchased $1.5 billion worth of Bitcoin. While this information has caused stocks for the cryptocurrency to soar, it has also raised the ire of people concerned with energy conservation, who are pointing to studies that show the tremendous amount of energy that’s used by Bitcoin.
Soon after news broke of the report, which also states that Tesla anticipates accepting Bitcoin as a form of payment “in the near future,” social media users criticized Musk for what they called an environmentally dangerous move from the usually conservation-minded electric car company CEO. One critique came from Scott Menor, the founder of personal-robot manufacturer Roambotics.
On Twitter, Menor posted some interesting statistics regarding Bitcoin’s energy use. He noted that a single Bitcoin transaction “wastes” roughly 741 kilowatt-hours of energy, while a Tesla Model 3 Long Range electric car uses 16 kWh to travel 100 km before it needs to be recharged.
Breaking down the math further, Menor wrote: “Buy one [Model 3] with Bitcoin and you’ve immediately wasted almost 5,000 km (more than 3,000 miles) worth of driving just on the transaction alone.” He ended his tweet with “Genius @elonmusk.”
Along with causing some back-and-forth discussion in the replies to Menor’s tweet, his post was also shared on Reddit, where users either defended or attacked Musk. Throughout the day, others on Twitter noted the problematic consequences that Bitcoin may have on the environment.
The 741 kilowatt-hours number Menor cites can be seen in a Statista graphic published in November 2020. (A kilowatt-hour is a standard unit for measuring energy; it’s actually a composite unit of energy that’s equal to one kilowatt (kW) of power sustained for one hour.) The graphic comes from research by Shanhong Liu, an expert on tech trends and the global software industry. Liu’s research compared the average energy consumption for one Bitcoin transaction in 2020 to the energy consumption involved with a cumulative number of Visa transactions. According to Liu, one single Bitcoin transaction used 741 kilowatt-hours, which was substantially higher than that of 100,000 Visa transactions, which totaled 149 kilowatt-hours.
Mark Z. Jacobson, a professor at Stanford University and an energy expert, confirmed the numbers and math with Newsweek via email. He wrote of Menor’s social media post: “The numbers are similar for a Tesla Model S, which goes about 270 miles on 70 kWh of charge. So, 741 kWh of charge would result in a range of 741 kWh x (273 miles / 70 kWh) = 2,900 miles. A typical U.S. home uses 10,600 kWh per year. So that means that (10,600 kWh/yr / 741 kWh/bitcoin transaction) = 14.3 bitcoin transactions results in the same electricity consumption as an average household for a year.”
Not everyone agrees with Senor’s original statement, though. Chris Bendiksen—the Head of Research at global digital asset investment firm CoinShares and an expert on Bitcoin—says the calculation simply doesn’t make sense. Bendiksen wrote to Newsweek: “In Bitcoin, there is no energy requirement per transaction. In its current era of coin emission, at a given hashrate, Bitcoin will consume the same amount of energy per unit time regardless of how many transactions take place—it is a systemic security measure and decentralized clock mechanism, not a per-transaction requirement.”
So, according to Bendiksen, thinking of it in terms of just a single Bitcoin exchange burning a certain amount of energy, and more exchanges burning even more energy at that same rate, is mistaken. Bendiksen added that another “problem with this line of reasoning is that most Bitcoin transactions take place outside of the blockchain (on exchanges and the lightning network), and there is no way of knowing how many there are. Using Bitcoin’s on-chain transactions as a measure of total transactions is like using the settlement system of the Federal Reserve as a measure of how many transactions take place in the US economy—it’s just not the right number.”
Other efforts in recent years have tried to quantify the amount of energy/electricity used by Bitcoin. In 2019, the University of Cambridge developed an online tool measuring Bitcoin’s electricity usage in comparison to that of entire countries. According to the University of Cambridge’s findings, Bitcoin’s electricity use is higher than many countries, including the United Arab Emirates, the Netherlands, Austria and Israel.
Much of the energy use comes from the process that’s commonly referred to as “mining” Bitcoin. This is when computers known as mining machines, which are connected to the crypto-currency network, verify transactions made by people who send or receive Bitcoin. The process prevents fraudulent editing to the transaction records, and miners are in turn paid small amounts of Bitcoin for operating this system. However, in an effort to maximize profits, people have connected large groups of miners to the network, and since this means miners are essentially working non-stop, the electricity used is quite large.
The scientific journal Joule in 2019 also tried to quantify Bitcoin’s energy usage and the amount of carbon emissions it causes. The journal estimated that Bitcoin produces 22 megatons of carbon dioxide annually, which is roughly as much as Kansas City.
Newsweek contacted Tesla and Menor for comment but, did not heard back in time for publication.