[Bit]coin flipping: Pre-ordering Tesla Model 3 with Bitcoin is like recycling electricity
After Mason Borda, a software engineer at BitGo revealed that he preordered a Tesla Model 3 with Bitcoin and Christopher Malmo, internet advocate at OpenMedia discovered that Bitcoin consumes too much electricity, one thought sprouted in my head: buying an electric car with Bitcoin is like recycling electricity.
Mason Borda, a software engineer at BitGo and creator of GitMoney, wrote in a blog post in early April that he preordered a Tesla Model 3 for 2.413612 Bitcoin. Borda could not directly transfer bitcoins from his wallet address to Tesla’s wallet, which is why he used ShakePay, a Bitcoin-powered credit card service. Using a credit card service to process Bitcoin payments for fiat currency payments is now a growing trend because this method eliminates the volatility problem by transforming bitcoins into fiat currency while the transaction is in progress. Therefore, merchants receive cash instead of Bitcoin and the unpredictable nature of this digital currency does not affect the payment.
Bitcoin = electricity
Christopher Malmo, internet advocate at OpenMedia and contributor at VICE Canada, wrote in an article in June 2015 that Bitcoin is unsustainable because it uses too much electricity. According to Malmo’s calculations, one Bitcoin transaction uses enough electricity to power 1.57 American households for one day. The problem is that as Bitcoin continues to grow and more people adopt this cryptocurrency, power consumption is also bound to grow. Malmo cited Matthew Green, a cryptography expert at Johns Hopkins University, as saying that every transaction where there is an exchange of services or goods happening “is really representing even more electricity.”
Less than one year later, Sebastiaan Deetman, an engaged environmental researcher and a Bitcoin enthusiast, started from Malmo’s calculations and found that if the Bitcoin network continues to expand the way it has done lately, transactions could consume as much electricity as a small country like Denmark by 2020. A centralized network of volunteers validates and processes Bitcoin transactions, generally hosting hardware to perform calculations. The network of Bitcoin “miners” makes sure that the system is secure, but it also consumes roughly 350 megawatts. Plus, the problem is even more severe as the growth rate has skyrocketed due to the having of the Bitcoin block-reward, which is expected to occur this summer —thus it could have serious consequences on the energy consumption.
Preordering an electric car with ….electricity
We’ve already decided that electricity is what fuels Bitcoin mining, Bitcoin transactions and the whole idea behind this cryptocurrency. What is the connection between preordering a Tesla Model 3 and Bitcoin, you ask? They cannot function without electricity. Although Bitcoin uses massive amounts of electricity and might consume even more in the near future, there’s a sense of fulfillment in the fact that you can buy a car with electricity —one that uses electricity to get you from point A to point B.
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