At current rates,such bitcoin “mining” devours about the same amount of energy annually as the Netherlands did in 2019,the latest available data from the University of Cambridge and the International Energy Agency shows.

Some investors cast doubt on the use of bitcoin for Tesla purchases months ago.

“We are of course very concerned about the level of carbon dioxide emissions generated from bitcoin mining,” Ben Dear,CEO of Osmosis Investment Management,said in February,shortly after Tesla’s bitcoin holdings became public. Osmosis is a sustainable investor managing around $US2.2 billion in assets that holds Tesla stock in several portfolios.

Currency trading analysts said Musk’s tweets on Wednesday were inevitable. “The environmental impact from mining bitcoins was one of the biggest risks for the entire crypto market,” said Edward Moya,a senior market analyst at currency trading firm OANDA. “Over the past couple of months,everyone disregarded news that Bitcoin uses more electricity than Argentina and Norway.”

Mark Humphery-Jenner,an associate professor of finance at the University of New South Wales,said he was more concerned about Tesla management’s precipitous decision-making,given the environmental concerns were well known “before Tesla accepted bitcoin”.

Cryptocurrency support

Some bitcoin proponents note that the existing financial system - with its millions of employees and computers in air-conditioned offices - uses large amounts of energy too.

Musk reiterated he remained a strong believer in cryptocurrencies. “We are also looking at other cryptocurrencies that use less than 1 per cent of bitcoin’s energy/transaction,” he tweeted on Wednesday.

Just a day earlier,Musk had polled Twitter users on whether Tesla should acceptdogecoin,a currency he has helped turn from a joke into a valuable commodity.

He announced on Sunday that his commercial rocket company SpaceX will accept dogecoin as payment to launch a lunar mission next year - just hours after he sent the cryptocurrency spiralling downward when he called it“a hustle” during a guest-host spot on the Saturday Night Live comedy sketch TV show.

China Dominance

The dominance of Chinese bitcoin miners and lack of motivation to swap cheap fossil fuels for more expensive renewables could mean there are few quick fixes to the cryptocurrency’s emissions problem.

Chinese miners account for about 70 per cent of bitcoin production,data from the University of Cambridge’s Centre for Alternative Finance shows. They tend to use renewable energy - mostly hydropower - during the rainy summer months,but fossil fuels - primarily coal - for the rest of the year.

Officials in Beijing are conducting a check on data centres involved in cryptocurrency mining to better understand their impact on energy consumption,sources told Reuters last month.

In theory,blockchain analysis firms say,it is possible to track the source of bitcoin,raising the possibility that a premium could be charged for green bitcoin.

Reuters