By Jonny Lupsha, Wondrium Staff Writer
Popular cryptocurrency Bitcoin is no longer acceptable tender at Tesla. Its mining and encryption measures involve a taxing computer process that many call an “environmental disaster.” What makes it so environmentally unfriendly?

Multibillionaire Elon Musk said that his company Tesla will no longer be accepting Bitcoin as payment for its cars. The news came just three months after Tesla initially announced that it would take Bitcoin for vehicle transactions. Musk cited his concerns over Bitcoin’s environmentally unfriendly mining and encryption process as his reason for no longer doing business using Bitcoin.
The Bitcoin mining process of how new coins are entered into circulation is what provides the Bitcoin cryptocurrency with its security and value. Understanding the mining and coding systems for Bitcoin may seem difficult, but in The Great Courses’ video “The Cryptocurrency Craze,” Dr. Connel Fullenkamp, Professor of the Practice and Director of Undergraduate Studies in the Department of Economics at Duke University, explained it in plain English.
Cryptographic Hash Functions
According to Dr. Fullenkamp, Bitcoin’s founder worked two important cryptographic techniques into it. The first is called a public-private key system and the second are cryptographic hash functions. The public-private key system simply secures payment instructions, exchanged by users. The cryptographic hash functions are more complicated.
“A cryptographic hash function is a computer program that takes a set of data and makes a label for it, called a hash,” Dr. Fullenkamp said. “Bitcoin and other cryptocurrencies use these hashes to establish tamper-resistant public records. Each hash looks like a string of random characters, though it really isn’t random and each has a fixed length.”
For example, the word “hello” could be assigned a hash of dozens of characters. Different data sets can be assigned to the same hash, but finding a data set with the same hash is time-consuming and very demanding computationally. The way they make transactions tamperproof involves the public-private key.
Dr. Fullenkamp said that each payment message broadcast to the network gets verified using the public-private key. Once verified, messages get bundled into a list called a block. These transactions are verified and recorded in a public ledger by a person who is called a Bitcoin miner.
Blocks and Blockchains
“The maker of the block, a Bitcoin miner, will write an introduction to this list called a header,” he said. “The miner places the hash of the most recently created valid block in the header of the block he or she is writing. So, each block of the chain starts off with key information about the previous block. Hence the term ‘blockchain.'”
According to Dr. Fullenkamp, blockchains are tamperproof because you can select any block in the chain and feed the data set into the hash function to calculate the hash. If the resulting hash doesn’t match the original hash entered into the header, it shows that there’s been tampering. It’s similar to old war encryption machines that way—the data set, when coded, should be the same both times.
The Allure and Ecological Problem of Bitcoin
With the knowledge of how Bitcoin’s encryption works, we can finally ask the big question: Why is it so environmentally unfriendly, earning a cold shoulder from Elon Musk? The answer is because of how Bitcoin miners check payment messages.
“The miners who build the blocks have an incentive to check the validity of each payment message, and each block, because they’re rewarded with new Bitcoins for each new valid block they add,” Dr. Fullenkamp said. “But they must compete against all other miners for the right to add new blocks to the blockchain by solving puzzles based on hash functions.”
According to Dr. Fullenkamp, these “puzzles” are basically a matter of finding a 256-character string of letters and numbers that has a hash value less than a certain number. He said that the target number gets smaller as more blocks are added, which makes the problem that much more difficult to solve.
“Bitcoin miners use powerful, electricity-guzzling computers to guess solutions to these problems,” Dr. Fullenkamp said. “Each coin requires several thousand dollars’ worth of electricity to operate the computers that mine it. The high rates of energy consumption underscore why [BIS Chief] Agustin Carsens and others refer to Bitcoin as an environmental disaster.”
It’s hard to believe that digital transactions could be so troublesome—or complicated—but it looks like Tesla customers will have to stick to cash, check, or charge.