How Bitcoin's Energy Usage Could spark the Next Bull Run
When Tesla revealed earlier this year that it will begin taking bitcoin as a means of payment for its services, bitcoin fans celebrated. As far as most people were concerned, that news signaled that the crypto market had reached new heights and that bitcoin had reached a new degree of acceptance.
Naturally, bitcoin supporters were disappointed when Tesla CEO Elon Musk stated months later that the company was reversing its decision and delaying plans to take bitcoin.
The Trouble with Bitcoin’s Energy
Musk made the news on his official Twitter account on May 12, 2021. Tesla would suspend bitcoin vehicle purchases owing to worries over the usage of fossil fuels for bitcoin mining and transactions, according to the tweet. He believes in the concept of cryptocurrency but cannot accept the use of tokens that have a high environmental cost, according to him. Instead, Tesla will investigate tokens that consume less than 1% of bitcoin's energy.
Bitcoin's energy-intensive nature is nothing new. Several people have been imprisoned around the world for attempting to steal energy for bitcoin mining, and the cryptocurrency consumes more energy than entire countries. Given that many countries are attempting to reduce their carbon emissions, but bitcoin consumes a significant amount of energy, there has been widespread concern about what the bitcoin boom may entail for the environment.
The narrative being spun is that bitcoin uses too much energy, which is harmful for the environment, and that because Ethereum is trying to lower its energy use by up to 95%, it will be supplanted by its competitors. Bitcoin's energy consumption, on the other hand, could be the key to its next bull run as well as its long-term viability both within and outside of the crypto industry.
A Change Coming?
Cryptocurrency is entering a new era, where it is being employed as both a medium of exchange and an investment instrument. Given the industry's ambitious growth goals, popular cryptos must be tweaked to best meet the needs of the general population.
Consider this: Ethereum recently announced a move from the current proof-of-work method to a proof-of-stake method. The new system will result in a large reduction in energy consumption by the theory of network, as well as a reduction in gas fees. This begs the question of where bitcoin will go next, especially when one of its main competitors is attempting to improve its efficiency.
However, addressing bitcoin's energy problem could be another key to long-term growth. Consumers want bitcoin to be used as a form of everyday payment, and investors want bitcoin to be more accessible so that its value can rise. Bitcoin has done well in both areas thus far, but its energy issue may be one of the last major roadblocks to its growth. It is certainly large enough for Tesla to abandon its plans to accept it.
If Bitcoin follows Ethrerum's lead and addresses its energy consumption issues, whether, through a switch to a more energy-efficient system like proof-of-stake or another method, it will pave the way for more opportunities.
First, Tesla may reconsider its decision to accept bitcoin, signaling to other companies that bitcoin is environmentally friendly enough to invest in. It will also silence bitcoin detractors who have cited the cryptocurrency's energy problems as a reason why it should not be widely adopted.
Given that another impediment has been removed, the next major bull run is almost certainly on the horizon. It also means that bitcoin's legacy of high energy consumption will be gone, and there will be little to prevent it from rising further. While resolving the bitcoin energy issue will almost certainly result in a bull run, it will also address an age-old issue that must be addressed if bitcoin is to progress.
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