The Tesla boss and self-proclaimed TechnoKing signalled that Tesla might accept other cryptocurrencies if they are less energy intensive. If he doesn't have yet another change of heart, one of the leading candidates could be a new cryptocurrency called Chia.
Green money?
Created by BitTorrent inventor Bram Cohen, Chia is described as "green money for a digital world". The theory behind the cryptocurrency is that anyone sitting at home can download its technology, which like Bitcoin enables decentralised payments, and run it on their computer using storage space.
According to its white paper, the process of creating Chias uses up to 10,000 times less energy than Bitcoin's mining technology. That's because Bitcoin is mined using a concept called "proof of work", which involves solving computationally complex puzzles in order to unlock new tokens.
The process has become a computing power battle, with machines devouring electricity while racing to sequence digital blocks in a chain. Recent estimates suggest Bitcoin will have a carbon footprint the size of Singapore this year and use 115 terawatt hours of electricity.
According to a report by Citigroup, Bitcoin uses around 66 times more electricity than it did in late 2015. Chia, meanwhile, is created using a concept known as "proof of space". To "farm" Chia, users need empty hard drives to house "plots" which are then given a certain number of blocks based on how much space is available.
"Instead of consuming massive amounts of electricity… proof of space leverages the over-provisioned exabytes of disk space that already exist in the world today," Chia claims in its White Paper, published this year. The cryptocurrency, which launched last week, has become so popular that some countries in Asia, such as Vietnam and China, have reported a shortage of hard drives.
An e-waste issue
In China, hard drive prices have doubled on some models as first movers attempt to cash in on buying up disk space. Currently, there is enough file space dedicated to Chia to store three billion films. But not everyone is as enthusiastic.
"Chia's proof of space uses a lot of hard drives," says de Vries. "They might reduce the need for energy, but they still have a waste of literal hard drives. They are pushing up the demand for these drives, which break down very fast when you use them for mining. It's an e-waste issue."
According to recent reports, continuous Chia farming reduces the shelf life of a 512GB hard drive from 10 years to just 40 days.
Bitcoin miners may also be reluctant to switch to Chia because it would require buying new equipment. That could mean that instead of solving Bitcoin's energy problem by providing an alternative, Chia is simply adding to the problem by offering yet another digital coin to be mined.
Still, its billing as a greener coin than Bitcoin may be paying off. The price of Chia was up 5pc in the past 24 hours.
Other efforts to improve the green credentials of cryptocurrencies include a move towards "proof of stake", another way of verifying a network. Ethereum, the second largest digital coin, is attempting to move towards this technology.
In simple terms, proof of stake choses computers on its network at random to verify transactions in Ethereum. According to Ethereum.org, "validators don't need to use significant amounts of computational power because they're selected at random and aren't competing".
For now, such an upgrade remains a long way off. In the meantime, Ethereum's energy consumption has skyrocketed, consuming 46 terawatt hours of energy, as much as Hong Kong. Whichever future cryptocurrency Musk chooses, it will take time to repair Tesla's green credentials.
"I am happy they came to realise this was not the best course of action for Tesla," de Vries says. "It is somewhat ironic that the entire net gains of deploying electric vehicles has been destroyed because of Bitcoin mining."
