What is the connection between a coal mine in China and the world of cryptocurrency? Turns out there’s a deep link. Tesla’s billionaire CEO Elon Musk recently said: “A single coal mine in Xinjiang flooded, almost killing miners, and Bitcoin hash rate dropped 35%.” He was responding to a thread on why he does not think bitcoin is decentralized, as a large proportion of mining is concentrated in very few hands, and that why he is focussing his attention on Dogecoin.
This came in the backdrop of a flurry of tweets shared after Musk was called out for his criticism of bitcoin in a Twitter thread by crypto bull Peter McCormack that pointed out that decentralization was a key advantage of the cryptocurrency.
Musk retaliated with the example of the coal mine accident in China’s remote Xinjiang region. An immense coal mine in Xinjiang flooded in April and the resulting blackout brought nearly one-third of all of Bitcoin’s computing power to a standstill.
He also pointed out that Bitcoin was actually centralized seeing how one incident could hit the entire operation of the cryptocurrency.
This reiterates the fact that is disturbing: Bitcoin’s alarming carbon footprint and how it continues to be a danger to the environment due to its enormous power consumption.
The backlash on Musk comes in the aftermath of the electric car company’s CEO stopped accepting payment in Bitcoin. Musk announced on Twitter last week that Tesla would no longer accept Bitcoin as a form of payment due to environmental concerns. He, in turn, said he is looking at alternatives. This drew a lot of flak for him since the billionaire had previously publicly endorsed Bitcoin, to the point where he became one of the most popular and notable figures in the crypto-sphere.
Bitcoin tumbled further down after the tweets. As of May 19, it is now down by almost 30% to $31,000, wiping out more than $500 billion in value from the coin’s peak market value.
On the same day, European stock markets sank on soaring inflation numbers and China’s central bank announced that cryptocurrencies cannot be used for payments anymore, further sinking the Bitcoin value.