Manipulation or Search for Alternatives for Tesla?

Elon Musk continues to make time in the cryptocurrency market. In May, the owner of Tesla raised concerns about the increasing share of fossil fuels in electricity generation spent mining bitcoin. In addition, the company announced the suspension of the sale of cars for a coin, arguing the decision for the fact that the environment suffers during its production. This led to changes in the forex market: the price of BTC fell sharply, and the value of coins based on the POS algorithm increased.

Are Musk’s fears justified, which cryptocurrencies can replace Bitcoin in the automaker’s new strategy?

PoW vs. PoS

Mining bitcoin requires a large amount of electricity to run the ASIC. In Cambridge they calculated that the owners of crypto farms consume more electricity per year than all of Sweden. However, cryptocurrencies that use PoW (Proof of Work) consensus algorithms are the most popular among users. Largely, of course, thanks to bitcoin.

This algorithm involves the issuance of new coins as a result of solving a complex computational problem. The miner, whose equipment is more powerful, has more chances to become the author of a new block and receive a reward. Of course, when the value of a cryptocurrency grows, the number of people who want to make money from mining it also increases. Consequently, the power consumption of the network of said coin increases significantly (1 ASIC consumes about 1.5 to 2.5 kWh). So Musk is right: bitcoin mining now consumes more and more electricity generated by burning fossil fuels.

The PoS (Proof-of-Stake) algorithm uses a different criteria to select the author of the block. The more coins are stored in the wallet without movement, the greater the chance of receiving a reward. Naturally, in this case, the power consumption is significantly lower.

The first mining method is safer against malicious attacks on the network, simply because you need to spend large amounts of money to control 51% of its power. Of course, this is true for the most famous cryptocurrencies with a large number of miners, such as bitcoin or ethereum. But the algorithm, remember, uses a lot of electricity.

Despite the obvious damage, it is not known if Tesla’s abandonment of Bitcoin is actually due to environmental concerns or if the real reason is something else. But the market immediately reacted to Musk’s statement: the price of the first cryptocurrency fell. At the same time, the cost of coins in the PoS algorithm, on the contrary, began to grow. And users began to offer the billionaire various crypto payment alternatives for his company’s cars. Which of the digital currencies are more suitable for this?

Ecological alternative to Bitcoin for Tesla

Cryptocurrencies with a large capitalization and a large community can be of great interest as a means of payment for a large international company. The little known ones are too volatile and easily controlled by stock market speculators. Therefore, only the top coins listed on Coinmarketcap should be considered as a replacement for bitcoin. Several currencies fit these criteria:

one. Ethereal

Ethereum, the brainchild of Vitalik Buterin, is a decentralized virtual computer presented as a resource for smart contracts.

The concept of a blockchain platform that would serve as an environment for the creation, interaction, and existence of autonomous computer programs originated with Buterin in 2013. In July 2015, the Ethereum network went live. Prior to the launch, a pre-mine worth 73 million ETH, the native cryptocurrency of the network, was carried out. The maximum issuance of coins is not limited. Today it is the second largest digital currency by capitalization after bitcoin. At its current value (1 ETH = $2,700), its capitalization is almost $310 billion.

Initially, there was only one way to get new coins – mining. It remains the main to this day. However, in December 2020, a protocol update was released that brought the possibility of staking (PoS analog of the main technology). The reward for PoW miners for found blocks is constantly decreasing: from the initial 5 ETH, it has been reduced to 2 ETH (excluding commission). It is planned to further decrease to 0.5 ETH after the final implementation of Ethereum 2.0, a full transition to the PoS algorithm in 2022. And only then will it be possible to talk about replacing BTC with this cryptocurrency.

two. Cardano

The second biggest competitor of BTC is the Cardano project with the ADA token. This cryptocurrency ranks fifth in the ranking with a capitalization of $52 billion. It was created in 2015 by one of the early developers of Ethereum, Charles Hoskinson. Cardano also serves as a platform for smart contracts, however, according to its creators, with a broader functionality. Coin issuance is based on a variation of the PoS algorithm. However, to date, this project has yet to make it out of the development stage for a full launch, so it’s hard to believe that Tesla would pick it.

3. Wave

This coin (XRP) is in 6th place with a capitalization of $51 billion, perhaps this is the most controversial cryptocurrency, which many even refuse to consider as such for various reasons. However, it can be safely called an asset of the financial world. Around 200 of the largest banks and organizations use the Ripple platform to make cross-border payments at high speed (3-5 transactions per second) and with low commission.

All XRP coins were issued when the network went live and partially froze. The additional issue is expressed in the monthly release of part of the tokens by the project team. This could be one of the safest options for Tesla, were it not for the issuer’s legal problems with US regulators.

Four. Moles

DOT ranks 8th in terms of capitalization – $26 billion. The project was created as a platform that combines various blockchains with the ability to create their own applications, services and systems. The network operates with the PoS algorithm. The launch took place in 2020.

According to the plan of the developers, the project will become the basis of the Internet of the future – Web 3.0. However, 10,000 DOT is required to stake a coin, which is equivalent to $280,000 at the time of writing, making the cryptocurrency interesting only for institutional investors.

5. Solarium

SOL dApps and smart contracts launch platform was founded in 2017. It uses PoS and PoH algorithms. It has a high transaction speed: more than 190 thousand operations per second. The network was launched in 2020 and is ranked 16th in the Coinmarketcap rating with a capitalization of $11 billion. This cryptocurrency is promising, but too young and requires a serious test of strength.

In addition to those listed, there are many previously little-known or popular cryptocurrencies, but today they have almost lost their relevance. They have a much smaller capitalization and their value is easier for market makers to manage. This fact automatically makes such coins unsuitable as a means of payment.

What’s the score?

Despite the serious damage caused by bitcoin to the environment, it is still the safest means of making payments for Tesla. According to some experts, the damage from BTC mining is much less than that from other areas of industrial activity.

Galaxy Digital compared the cost of mining the first cryptocurrency (113.9 TWh) with the work of the global gold mining sector (240 TWh) and consumption in the banking sector (263 TWh). And therefore, following the automaker’s logic, Tesla should now abandon banking services altogether and not consider the precious metal as a means of payment.

So, most likely, the point is not at all in the “dirty” bitcoin, but in something else. Furthermore, Elon Musk claims that the company did not sell the previously acquired bitcoins.