Tesla is a multinational company that manufactures electric vehicles.
As of 2021, Tesla has about 2 billion dollars worth of
Bitcoin.
While Elon Musk, the CEO of Tesla, and some critical individuals in Tesla want to make transactions with cryptocurrency, many shareholders wish to stop it.
Topping the list of the shareholders against the use of Carbon-rich crypto is Karen Róbertsdóttir.
Karen wrote a proposal to Tesla showing details of how blockchain mining activities harm the environment.
Some other shareholders had submitted a resolution earlier to that effect.
Finally, Tesla is putting a halt to its three-month-long transactions using carbon-rich tokens.
Tesla is one multinational company that uses cryptocurrency as a means of the reserve, investment, and transactions.
As of the end of 2021, it was estimated that Tesla had nearly $2billion worth of
Bitcoin.
Over the years, the electronic automobile giant and its founder, Elon Musk, have continued to be a direct determinant of the rise and fall of cryptocurrencies.
While Tesla is developing Electric vehicles to accelerate the world's transition to sustainable energy, there is a conflict of interest in the use of Cryptocurrencies as means of transaction.
Because cryptocurrencies consume excess energy during mining and validation of transactions.
Without further ado, we shall identify the activities of Tesla over the years, its influence on the crypto market, and the events surrounding the disagreement between stakeholders on the use of Carbon-rich crypto.
What Is the Idea Behind Tesla?
Tesla Inc is an American electric vehicle manufacturing company based in Texas.
Tesla was founded in July 2003 in California, the United States, by Martin Eberhard and Marc Tarpenning.
“Tesla” is a tribute to an electrical engineer and inventor called Nikola Tesla.
In 2004, Elon Musk invested $6.5 million, making him the largest shareholder of Tesla.
Tesla Inc was formerly called Tesla Motors Inc until February 2017. Since the name change, Tesla has expanded its activities to include battery energy storage, solar panels, solar roof tiles, etc.
Tesla designs its products toward a green and clean energy-driven environment.
Tesla has a market capitalization of about $1 trillion, making it the most valuable automaker.
Tesla's subsidiary, Tesla Energy, is a household name Photovoltaic system installation, and this subsidiary is one of the largest suppliers of battery energy storage systems.
As of 2021, Tesla Inc. has over 99,000 employees scattered across 655 retail stores and service centres.
Tesla services include Vehicle servicing, assembling, Vehicle charging, insurance, Software development, and updates.
Events Surrounding Tesla’s Fight With Its Shareholders On the Use of Carbon-rich Crypto
Elon Musk, the CEO of Tesla, tweeted that the company is suspending vehicle transactions using cryptocurrency.
This announcement is coming on the heels of a proposal by one of the shareholders and investors in Tesla. The proposal written by Karen Róbertsdóttir is of the view that Tesla should put a halt to all carbon-rich crypto transactions.
Karen Róbertsdóttir, an Icelandic investor of Tesla, further argued that the energy consumption of
Bitcoin transactions is massive. Much of the energy powering the blockchain transactions are generated from Fossil fuels.
Since Tesla is working towards accelerating the world's transition to sustainable energy, Karen Róbertsdóttir believes allowing
Bitcoin transactions is a step backward.
Another issue of concern raised in the Proposal is the amount of hydropower development and wastes released from mining activities. These are serious issues affecting the ecosystem and should not be supported.
Furthermore, Karen Róbertsdóttir is concerned about the volatility risk of Tesla's balance sheet by investing in Cryptocurrency. Since the crypto market is under no regulation, it is prone to a sharp decline in value and inflation.
An earlier resolution was filed in October 2021 by some stakeholders. The resolution called Tesla to liquidate all newly acquired cryptocurrency assets and halt all crypto-related activities.
The proposal by Karen and the resolutions of some stakeholders did not go down well with Elon Musk and some other management teams.
Xuehui Cassie Zhang, Tesla's Managing Counsel, told the Securities and Exchange Commission that Tesla disagrees with the resolution. Zhang made the position of Tesla’s management clear that they are fighting the resolution because it is “unnecessary and overly pre_script_ive.”
Eventually, in what seems to be a win-win situation for the management and stakeholders, Tesla stopped accepting
Bitcoin and decided to take Doge, a lower carbon-rich token.
Albeit, Elon Musk is still optimistic that Tesla will resume taking
Bitcoin when the miners start using “clean energy.”
Impact of Tesla On the Crypto Market
With a holding of about $2 billion worth of
Bitcoin, Tesla indirectly becomes a determinant in the crypto market.
When Zhang announced that Tesla would start accepting Doge, the Value of Doge increased exponentially.
Similarly, when Elon Musk tweeted that Tesla had suspended making transactions with
Bitcoin, the token’s market cap fell by an estimated 8%.
Since the suspension of
Bitcoin transactions by Tesla, barely after three months of its acceptance, the token's value has continued to drop.
Conclusion
Image: Quora
Tesla claimed that it is using cryptocurrency as a hedge against the rise of inflation. This was its stand for fighting stakeholders and their resolutions calling for the jettison of carbon-rich crypto tokens.
The decline in the price value of
Bitcoin in recent times has proved this stand to be weak and insubstantial.
The acceptance and halt of
Bitcoin as a means of payment for Tesla's purchases directly affected the respective tokens and the crypto market at large.
Experts believe that such a critical decision should be put to the vote by shareholders to ensure popular opinion prevails.
Author:
Valentine A., Gate.io Researcher
This article represents only the researcher's views and does not constitute any investment suggestions.
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