You can now buy a Tesla with Bitcoin—at a staggering cost, critics warn

The embrace of Bitcoin could risk Tesla’s position as an ESG darling.

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On Wednesday, Elon Musk once again took to Twitter to tell followers they can now buy a Tesla with Bitcoin.

Analysts and followers once again took to Twitter to note that, in the age of emissions cuts and ESG investing, this was more than a little ironic.

“Selling electric cars to save the planet and lead us into a clean energy future, but then accepting payment for the cars in #Bitcoin is a bit like PETA asking for donations in the form of fur coats,” tweeted Edmund Schuster, an associate professor at the London School of Economics.

“Reverse carbon offsetting,” quipped Jamie Powell, a writer for the Financial Times’ Alphaville.

Tesla’s CEO—or “Technoking”—has continued to blast his support for Bitcoin after buying $1.5 billion worth for the company and saying he would accept the currency as payment. That helped push the cryptocurrency to a record high of $61,283.80 last week—and sure enough Bitcoin jumped in value following Musk’s latest announcement.

But skepticism, on at least one front, has continued to grow.

Tesla, after all, is framed as a front-runner for the low-carbon economy. That has made it a mainstay of a new flock of ESG indexes on environmental grounds (it’s “S” and “G” credentials have already been undermined). Those funds have broadly spent much of the last year on an unmitigated tear, often outperforming even a buzzy S&P 500, and spurring new financial products from some of the largest asset managers on the market.

Meanwhile, Bitcoin’s environmental toll is no secret. The fanatically energy-intensive mining process, which is broadly dependent on fossil fuel energy and, in particular, cheap and abundant coal in western China, has fueled soaring CO2 emissions. Analysts and investors have put estimates of the size of these emissions broadly in line with those of small to midsize industrialized nations, from Argentina to Greece to the Netherlands.

“While Bitcoin may have some undetermined social value, it is hard to argue that it provides a greater value to society than the lives of millions of people,” analysts at the Bank of America noted dryly last week in an investors note.

Measured instead as a company or organization, Bitcoin is roughly comparable to American Airlines, or even the federal U.S. government, which employs more than 2 million people, BofA says.

The main argument for Bitcoin “is not diversification, stable returns, or inflation protection, but sheer price appreciation,” the analysts added—and the complexity of the mining system means that as prices rise, inherently, so do emissions. And yet few ESG providers factor Bitcoin exposure into their ratings.

Of course, some argue that Bitcoin is not without benefits—and its environmental impact is not as bad as has been claimed. Writing for Fortune, Alex Tapscott, manager of Ninepoint Partners’ Digital Asset Group, referred to a Cambridge University study that found 39% of Bitcoin mining is fueled by renewable energy—mainly hydropower.

However, there have been documented downsides even here: Alex Pickard, a former Bitcoin miner, told Fortune’s Shawn Tully that his efforts to use cheap, abundant hydropower in Washington State were felled when the local utility shut down his operations for overloading the grid. And hydropower, lest we forget, is vulnerable to rising drought—exacerbated by climate change.

“Again, the network is operating exactly as it was designed to do,” BofA analysts noted. “But this comes at an enormous environmental cost, with arguably a limited social purpose.”

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