Opinion By Jamie Court for THE MERCURY NEWS
May 25, 2021
When Elon Musk joked on Saturday Night Live that cryptocurrency was a “hustle,” he unwittingly summed up the strategy by which Tesla has fleeced the state of California.
Tesla invested $1.5 billion in Bitcoin, the trading of which requires computer mining networks that use massive amounts of electricity and generate more greenhouse gases than Argentina’s electric grid produces annually. At the same time, Tesla benefited from hundreds of millions in state credits for having a zero emissions electric vehicle fleet — the environmental benefits of which were almost certainly wiped out by the carbon cost of the company’s investment in Bitcoin.
Musk reversed course recently on his decision to allow Bitcoin to be used for Tesla purchases, citing the environmental concerns. He did not, however, divest Tesla of its Bitcoin. The decision to hold Bitcoin helped the currency’s recovery after a recent rollercoaster week. It’s time for the state of California to force Tesla to get rid of its Bitcoin stake or lose its tax credits and subsidies.
Bitcoin is an electricity monster because its transactions require a vast network of connected computer “miners” that solve problems and puzzles in order to validate its trading and prevent fraud. Since China’s coal-fired electricity is so cheap, many of the mining computer networks are based there and emit excessive greenhouse gases.
Musk’s Bitcoin investment has already increased the network’s massive carbon dioxide expenditure — dwarfing any climate savings from the Tesla fleet.
Cryptocurrency economist Alex De Vries estimated that Bitcoin’s carbon usage for 2021 is on track to reach 98.9 megatons, as much as the city of London. By contrast, Tesla’s fleet saved 170,000 tons of CO2 between 2012 and 2016.
The fact that Musk would take the estimated $1.5 billion in all government subsidies Tesla received in 2020 and invest the same amount in a cryptocurrency whose CO2 footprint is antithetical to those subsidies shows a lot of chutzpah.
In fact, Tesla made all of its $533 million profit in the first quarter of 2021 not by selling cars, but by selling Bitcoin and its carbon credits. The company reported $110 million profit from dumping some of its Bitcoin and $518 million in profit on the sale of regulatory credits to other automakers who did not meet their EV goals, nearly all its quarterly profit.
Investing in Bitcoin is investing in unnecessary greenhouse gases. The California Air Resources Board needs to acknowledge this and penalize Tesla and any other company that makes such a large investment in increasing the carbon foot print that its mission is to shrink.
Musk isn’t just an investor in Bitcoin, he has been its biggest booster. Musk’s promotion of Bitcoin helped drive up its price by more than a third. Tesla’s promotion of Bitcoin has already led to more investments by computer mining networks in China, which get a chance to have a slice of the Bitcoin fortune for their efforts.
If Bitcoin reaches 99 million tons of carbon emission in 2021 and Tesla’s boosterism is responsible for one-third of those emissions, that works out to 33 million tons of carbon dioxide. That amount is more than double the 16 million tons Tesla itself boasts its cars have saved.
Time for the state to do the math and get tough on Musk and Tesla for their crypto-hypocrisy.
Musk now says he will not sell any more Bitcoin until it is more carbon neutral. Those are vague promises from a CEO obviously concerned about the continuation of his EV subsidies. Tesla’s continuing investment encourages Bitcoin’s growth.
The California Air Resources Board should cut Tesla off from carbon credits if the automaker is going to invest in greenhouse gas-emitting cryptocurrencies.
Jamie Court is president of the nonprofit public interest group Consumer Watchdog.