Elon Musk says he's working with Dogecoin developers to make the cryptocurrency more efficient
- On Wednesday, Tesla stopped accepting bitcoin as payment for its electric cars.
- The next day Tesla CEO Elon Musk said he was working to make dogecoin more sustainable.
- Dogecoin uses less energy than bitcoin and has long been a Musk favorite.
The day after announcing Tesla would no longer accept bitcoin as payment for its cars, Tesla CEO Elon Musk seemed to suggest dogecoin could become a more sustainable replacement.
"Working with Doge devs to improve system transaction efficiency," Musk tweeted on Thursday. "Potentially promising."
-Elon Musk (@elonmusk) May 13, 2021
In his initial bitcoin announcement, Musk said the company was looking for a more carbon-neutral replacement to the top cryptocurrency.
Dogecoin sagged on Musk's decision to eliminate bitcoin purchasing options but leapt from 43 cents to over 50 cents apiece following Musk's commitment to making the meme coin more environmentally friendly.
The cryptocurrency, originally made as a joke between two engineers, has long been a Musk favorite and is known to consume less energy than bitcoin.
The energy consumption of cryptocurrencies are linked to the calculations a computer goes through every time a transaction is processed or a new coin is mined. In those moments, thousands of computers race to verify the transactions - a process that relies on large amounts of electricity and computing power.
What's more, much of the energy used to mine for bitcoin comes from coal (the fuel that emits the most CO2) as 75% of bitcoin mining takes place in China, a country where over half of its power comes from coal.
While dogecoin is more environmentally friendly than bitcoin, there are still several ways that Musk could contribute to eliminating the digital currency's carbon footprint, including focusing on renewable energy sources for dogecoin mining processes, as well as further streamlining the calculations computers go through when minting and trading coins.
Musk's decision to somewhat sever Tesla's ties to bitcoin a mere three months after setting the cryptocurrency as a purchasing option could have serious ramifications for the future of crypto. After Tesla's announcement, bitcoin slid 13% to around $50,000, down from its record high last month near $65,000.
In the past, the CEO's tweets have been often linked to spikes in bitcoin and dogecoin. His decision for Tesla to invest in $1.5 billion of bitcoin caused a surge in demand for the digital currency, further hiking up demand for the coin, as well as its energy consumption.
Musk referenced the spike in energy used by bitcoin since Tesla invested in it as the primary reason the company would no longer accept the digital coin.
"To be clear, I strongly believe in crypto, but it can't drive a massive increase in fossil fuel use, especially coal," he tweeted.
-Elon Musk (@elonmusk) May 13, 2021
The CEO's focus on making dogecoin more sustainable will likely continue to add support to the meme coin, which has already had a record year. But, much like bitcoin, Musk's support could also end up expanding dogecoin's carbon footprint through heightening demand.
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