On May 13 Elon Musk shared a tweet that knocked the price of Bitcoin down by 25%. Here’s what it said.

“Tesla has suspended vehicle purchases using Bitcoin. We are concerned about rapidly increasing use of fossil fuels for Bitcoin mining and transactions, especially coal, which has the worst emissions of any fuel.

Cryptocurrency is a good idea on many levels and we believe it has a promising future, but this cannot come at great cost to the environment.

Tesla will not be selling any Bitcoin and we intend to use it for transactions as soon as mining transitions to more sustainable energy. We are also looking at other cryptocurrencies that use <1% of Bitcoin’s energy/transaction.”

For reference, Elon Musk has been driving Bitcoin’s price uphill through Twitter. His company Tesla, whose mission is to help decarbonize the planet, bought $1.5 billion worth of Bitcoin in February 2021. The catch? Bitcoin’s network emits 55 million metric tons of CO2 per year. That’s the same carbon footprint of a city the size of London or a country like Singapore.“Ironically, it’s also more than the entire estimated net gains from deploying electric vehicles,” said Alex de Vries, an economist who has been calling out Bitcoin’s emissions for years.

Some would think Elon is a hypocrite. Others would assume he made a mistake. Either way, I think it’s an opportunity to test Bitcoin’s antifragility.

Antifragility is a concept developed by mathematician and philosopher, Nassim Nicholas Taleb. The easiest way to understand antifragile systems is to compare them with other types of systems.

• A fragile system is like glass. It breaks after a shock.
• A resilient system is like rubber. It recovers after enduring stress.
• An antifragile system is like a muscle. It becomes stronger after getting torn in the gym — and that’s what most systems aim at.

“In every domain or area of application, we propose rules for moving from the fragile toward the antifragile, through reduction of fragility or harnessing antifragility,” Taleb wrote. “And we can almost always detect antifragility (and fragility) using a simple test of asymmetry: anything that has more upside than downside from random events (or certain shocks) is antifragile; the reverse is fragile.”

Since we expect Bitcoin and other cryptos to become the money of the future, we’d rather have them be antifragile. And for that to happen, Bitcoin needs to overcome the energy obstacle and align with our need for a sustainable future. Otherwise, the downside will outweigh the upside and Bitcoin will die out of fragility.

“We are going to run out of oil and then civilization is going to collapse,” Elon Musk said in an interview. And of course, the same applies to coal and the rest of fossil fuels. “So why run this crazy experiment where we take trillions of tons of carbon from underground and put it in the atmosphere and the oceans?” he added. “This is an insane experiment. It’s the dumbest experiment in human history.”

Assuming that we’re smart enough to curb carbon emissions before wars and natural catastrophes hit us hard, Bitcoin will have to find alternatives to fossil fuels. This is no easy task because mining Bitcoin and running transactions require huge computing power.

For reference, one bitcoin transaction devours the same energy an average American household consumes in a month. The result? 75% of Bitcoin miners operate in China where electricity is cheaper. Though China is serious about transitioning to renewable energies like solar and wind, it has a hard time offering an immediate solution to Bitcoin mining. So, for now, the Bitcoin network feeds on coal.

Sound bad? It gets worse.

A big part of the hardware used for Bitcoin mining is too specific to get repurposed. It also gets outdated in less than two years. So, every time Bitcoin miners upgrade their gears, they generate a ton of electronic waste full of toxic substances. “It’s already the case that a single bitcoin transaction is equivalent to throwing away an iPhone 12 mini in terms of materials,” said Alex de Vries. “That’s already how bad it is.”

Looking at the current situation, Bitcoin looks like an obstacle to a much-needed green future. There’s no solution other than give up on the currency…or so you’d think.

The reason Bitcoin is an energy black hole is the maths behind it. Running transactions and generating new coins requires hyper-complex math problems called Proof of Work.

Proof of work already overheats the best computers available in the market. The more Bitcoin’s network grows, the harder and more expensive proof of work becomes. That’s why the crypto-sphere tried to find a better alternative.

Enter Proof of Stake.

Unlike proof of work that’s a one-size-fits-all approach, proof of stake distributes mining power according to the proportion of coins held by the miners. Imagine that instead of asking everyone in a group to solve the same big problem (too much time and energy spent by everyone), you ask each member of the group to solve a tiny part of that problem (each one spends a little energy).

“If you have something running on proof of stake,” Alex de Vries said, “it wouldn’t even be 0.1 percent of the energy needed to run bitcoin.”

Now here’s a kicker. Etherium, the number two cryptocurrency, plans to shift towards proof of stake. In theory, if Etherium can do it, so can Bitcoin — at least if it wants to prove itself antifragile and make up with Elon Musk.

Until that happens, expect Etherium to speed up its transition to proof of stake and take the lights out of Bitcoin.

Disclaimer: I’m not a financial advisor. This article is not financial advice.

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Source: https://nabil-alouani.medium.com/elon-musks-breakup-with-bitcoin-is-an-antifragility-test-29b0168d7e54?source=rss——-8—————–cryptocurrency