Yesterday, Elon Musk tweeted this:
“Tesla has suspended vehicle purchases using Bitcoin. We are concerned about rapidly increasing use of fossil fuels for Bitcoin mining and transactions, especially coal, which as the worst emissions of any fuel.
Cryptocurrency is a good idea on many levels and we beleive it has a promising future, but this cannot come at great cost to the environment.
Tesla will not be selling any Bitcoin and we intend to use it for transactions as mining transitions to more sustainable energy. We are looking at other cryptocurrencies that use <1% of Bitcoin’s energy/transaction.”
$365 billion worth of cryptocurrencies got wiped off the market in short order.
In my opinion, this doesn’t matter for the long term.
First, I want to applaud Elon for being environmentally aware that Bitcoin does in fact use energy to keep the whole system running.
Elon’s mission is to get the Bitcoin community up to speed and educate policymakers about the importance of renewable energy mining.
Renewable mining is needed to reach $1 million BTC… Elon will make a significant contribution in this regard. These are all good things.
He’s missing a couple of important points though.
- Measuring Bitcoin by the amount of electricity it uses per transaction doesn’t make sense. The amount of energy used is independent of the transactions. You can have a low amount of hash power confirming the same amount of transactions as a high amount of hash power.
- There’s nothing he can do to stop China from burning coal to mine Bitcoin – except he could (and should) set up massive carbon negative mining operations like The Great American Mining Co. to offset the coal emissions. At the end of the day, the best way to get coal mining Bitcoin operations is to mine more efficiently at scale yourself.
And there’s another reason Elon might be focusing on this debunked aspect of Bitcoin…
According to Reuters, he is seeking a credit for entry into the U.S. renewable fuel credit market.
He can only get those government subsidies if Tesla shows it has a positive environmental impact on the globe.
It’s also important to note that Tesla isn’t selling any of the Bitcoin it currently has on its balance sheet.
They’re only not accepting payment for their vehicles in Bitcoin.
That won’t make much of a different in my opinion because that most hardcore Bitcoiners don’t sell their Bitcoin.
Pretty much every company who’s opened payments to Bitcoin in the past hasn’t seen that much of an uptick in sales because Bitcoiners know the price of whatever they buy in the future will likely go down the longer they hold Bitcoin.
Anyway, none of this will affect the price of Bitcoin in the long-run.
Before Elon announced Tesla purchased Bitcoin, it was trading for $35,000.
It shot up to $50,000 in short order after that.
After Elon’s most recent Bitcoin tweet yesterday, the cryptocurrency dropped from about $55,000 to as low as $46,000 before recovering back to $50,000. Now it’s hovering somewhere between those two points.
So, the way I look at it, we’re still up $15,000 (from $35,000 to $50,000) after Elon and Tesla’s involvement…
And like Elon mentioned, there are other cryptocurrencies in this space that you could use to play this market.
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