Which "green" cryptocurrency might Tesla increase for payments?

This article was published on Cointelegraph Chinese.

On May 13, Elon Musk revealed that Tesla would no longer accept any Bitcoin payments until Bitcoin mining becomes more environmentally friendly, which sent shockwaves through the entire cryptocurrency market.

Musk pointed out that while Tesla waits for Bitcoin to transition to renewable energy, the company will focus on "other cryptocurrencies" that consume less than 1% of the energy per transaction compared to Bitcoin.

"Tesla and Bitcoin"
------Elon Musk (@elonmusk) May 12, 2021

This tweet sparked a frenzy of speculation within the cryptocurrency community about which cryptocurrencies Tesla might explore.

Social influencer "The Cryptic Poet" told his 45,000 Twitter followers that he predicts Tesla will "use ETH or XRP," however, user "Massimo" pointed out that if Tesla uses ETH in its current state (which uses a proof-of-work mechanism like Bitcoin), it would be better to "stick with BTC."

"My prediction: Tesla will choose to use ETH or XRP."
--- The Cryptic Poet (@1CrypticPoet) May 12, 2021

According to an analysis by TRG Data Centers, it is estimated that Bitcoin consumes about 700 kilowatt-hours of electricity per transaction on average. According to Digiconomist, while Bitcoin's annual electricity consumption is comparable to that of the Netherlands, its annual carbon footprint is closer to that of Singapore, likely because a significant portion of Bitcoin mining uses cheap renewable energy. (Note: Estimates of electricity consumption per transaction are controversial, so this is used here merely as a very rough comparison tool).

Ethereum and PoS

Ethereum is estimated to consume 62.56 kilowatt-hours per transaction. The Ethereum network currently uses the same energy-inefficient consensus mechanism as Bitcoin—proof-of-work (PoW). According to Digiconomist, the annual carbon footprint of the Ethereum network is comparable to that of Sudan.

However, these issues will be resolved as the network is set to transition to ETH 2.0, which will introduce proof-of-stake (PoS). According to Nimbus, PoS is estimated to be 99% more energy-efficient than PoW.

Earlier this month, Rocket Pool contributor Joe Clapis ran 10 Eth2 validators for 10 hours using a mobile power supply and a hard drive connected to a Raspberry Pi on his front lawn, proving this point.

But all proof-of-stake chains can be said to be 99% more efficient than Bitcoin, so Tesla could almost choose any of them, from Solana to Cardano, and anything in between.

Ripple

XRP may be Tesla's recent choice (depending on the U.S. Securities and Exchange Commission lawsuit), as all XRP tokens are pre-mined, and according to TRG Data Centers, XRP transactions consume very little electricity, only 0.0079 kilowatt-hours. Ripple regularly publishes blog posts and announcements promoting how energy-efficient it is compared to proof-of-work blockchains.

Stellar

XLM also follows the XRP model, as all of its tokens were minted at genesis. The Stellar network also uses the Stellar Consensus Protocol (SCP) for transaction validation. It is said to require less energy than PoW and PoS.

Algorand

Algorand may be a contender. It not only runs on a pure proof-of-stake protocol, but the team announced on April 22 that its blockchain has achieved full carbon neutrality. Algorand has also partnered with Spanish fintech company ClimateTrade, which is building a carbon market to allow businesses to track their emissions in pursuit of broad sustainability goals. The two companies will work together to fulfill a sustainable commitment to make the network carbon negative.

Dogecoin

Elon Musk's long-time favorite Dogecoin may become the dark horse in this race? In fact, this meme coin relies on mining through the Litecoin network, which uses a proof-of-work mechanism. However, while Bitcoin mining employs the highly complex SHA-256 algorithm, Dogecoin and Litecoin mining use Scrypt, which is both energy-efficient and fast (though with significantly reduced security). Interestingly, TRG Data Centers estimates that LTC consumes 18.522 kilowatt-hours per transaction, while Dogecoin consumes only 0.12 kilowatt-hours per transaction.

When Musk initiated a poll on Twitter this week asking whether Tesla should start accepting Dogecoin payments, he may have been considering these estimates.
"Do you want Tesla to accept Dogecoin?"
--- Elon Musk (@elonmusk) May 11, 2021

Cointelegraph Chinese, as a blockchain news platform, provides information that only represents the author's personal views and does not reflect the position of Cointelegraph Chinese, nor does it constitute any investment or financial advice.