Bitcoin’s price fell off a cliff, and it left many people confused.
The price massacre took place at the same time Elon announced that Tesla would no longer accept Bitcoin as payment for their electric cars, because they viewed the electricity needed to keep the network running as bad for the environment.
The Bitcoin community went hostile.
They got together at the Bitcoin conference in Miami and screamed “F*** Elon.” (Perhaps the most cringeworthy thing I’ve ever seen.) Investors got mad at Bitcoin. When you lose money it’s easy to blame someone else. Elon and his billions of dollars are an easy target.
Elon’s actions clearly had an effect on Bitcoin. We only just found out the whole other side of the story.
The Badass Woman of the Investment World
There are too many men in finance.
Cathie Woods came along with her firm Ark Invest and made traditional gatekeepers in finance look like uneducated Romans from another century. She understood that working out the value of a company has changed.
A lot of tech companies like Uber appear to lose money and have poor fundamentals. This is true in the traditional sense. But Cathie came along and invested her firm’s money differently. Cathie believes you value a company based on network effects — in other words, how many new users are coming to a business and staying. Everyone told her she was nuts. Then the money she earned her investors took everybody’s breath away.
Cathie loves Bitcoin.
She is one of the few people who has met the core developers that build and decide the project’s future. Elon’s comments about Bitcoin’s energy usage being bad for the environment deeply upset Cathie. Thankfully, Twitter co-founder Jack Dorsey also became disappointed by the misinformation presented by Elon. Jack and Cathie got together to put on a recent conference to share their thoughts with Elon.
*Turns on Youtube to see Elon wearing a Bitcoin t-shirt*
What Elon Loves About Bitcoin
- “Bitcoin is mostly solving for the scarcity problem.”
Translation: creating US dollars out of thin air will not work forever. We need a scarce asset that stores value.
- “Solving for no-throat-to-choke … decentralization.”
Translation: Big Tech isn’t the future. Having Zuckerberg control our newsfeeds to sell ads is bad. Users need to own the tech they use and their privacy/data.
- “Has an open ledger which is quite good.”
Translation: Conventional finance uses cash. Cash is hard to trace and funds the majority of the illegal activity, according to a report done by Kathryn Haun who prosecuted the Silk Road crypto scandal.
The downsides of Bitcoin according to Elon
- The transaction volume is low.
- Transaction costs are high.
- Usability for the average person isn’t high.
Translation: Bitcoin doesn’t do everything and the lightning network that sits on top of Bitcoin will help resolve these bugs. Tech has bugs. We get it.
Look What He Does, Not What He Says
In general, I am a supporter of Bitcoin and the idea of cryptocurrency.
I am not an investor.
Wait for it …
The three things I own outside of SpaceX and Tesla of any significance are Bitcoin by far, and then some Ethereum and some Doge.
*Does evil laugh in front of every Bitcoiner*
If the price of Bitcoin goes down, I lose money.
I might pump but I don’t dump…haha. I definitely do not believe in selling [Bitcoin]. I would like to see Bitcoin succeed.
I’ve spent three months reading articles and watching bullsh*t videos about how Bitcoin is dead because Elon says so. The whole time it was a hoax. Why?
Let me tell you. Elon and his buddies got to buy Bitcoin at 50% off. He’s not even pretending anymore. He happily jokes about his Twitter account being able to pump and dump the price of financial assets.
What Daddy Doge Says About Bitcoin Versus Doge
*Elon giggles like a school girl every time the word doge is said*
Elon explains what Doge is. He says it has great memes and the community loves dogs and doesn’t take itself too seriously. That’s about all he has to say about Doge until he contemplates why it might be the eventual winner in cryptocurrency.
The simplest answer is the most likely one. A friend of mine came up with a variant that the most ironic outcome is the most likely one. Then I have a variant on that which is the most entertaining outcome is the most likely one.
If that is true then the most ironic and entertaining outcome would be that the cryptocurrency [Doge] that was started as a joke to make fun of cryptocurrencies ends up being the leading cryptocurrency.
*Elon does another evil laugh and looks at Jack Dorsey who switches topic to Bitcoin*
Translation: Doge is a joke. Bitcoin is serious.
Elon explains why he didn’t crash the Bitcoin price
Pay close attention to what Elon says.
From when Tesla announced it started to acquire Bitcoin and was doing Bitcoin transactions, there was a massive run up in the Bitcoin price. And also a massive increase in the amount of energy used to mine Bitcoin. There was just no way you could double or triple the amount of energy with renewables.
So I was like this is too sketchy. Tesla’s mission is accelerating the advent of sustainable energy. We can’t be the company that does that and also not do appropriate diligence on the energy usage of Bitcoin.
All I did is I said we’re going to suspend Bitcoin transactions for now. We’re not selling any Bitcoin. Nor am I selling anything personally. Nor is SpaceX/Tesla selling any Bitcoin.
Clearly these actions affect me financially. If I was clearly financially motivated then I wouldn’t express this reticence about Bitcoin energy usage.
Did Elon really not check Bitcoin’s energy usage before buying billions of dollars?
Come on. Of course Elon knew where the energy used to mine Bitcoin comes from. It’s not exactly a secret. Thanks to the China bans on Bitcoin mining, it has actually fast-tracked more energy to come from renewable sources.
Elon then goes on to drop another bomb that sounded rehearsed.
There appears to be a positive trend in the energy use of Bitcoin.
I want to do a bit more diligence to confirm the percentage of renewable energy usage is most likely at or above 50% … then if so, Tesla will resume accepting Bitcoin. I think we just want to do more diligence.
Elon spends a lot of the interview explaining how much he knows about Bitcoin and renewable energy, yet somehow his research failed him and caused him to make a terrible decision.
Tesla will soon begin accepting Bitcoin again for payment. I expect the price to slowly trend back towards where it was as JP Morgan and Goldman Sachs continue to make major announcements supporting Bitcoin and exposing it to their clients.
The real story will come when we get to see how much Bitcoin Elon or his companies may or may not have bought during the drop in price.
*Price of Bitcoin goes up right after the interview*
So Elon loves Bitcoin. He understands Bitcoin in intimate detail. He owns a large amount of Bitcoin both personally and through his companies.
He’s aware his tweets move the price of stocks and Bitcoin. He knows a lot about energy usage — but he forgot to check Bitcoin’s power consumption before investing billions of dollars in it.
Did Elon pump and dump the price of Bitcoin? I’ll leave you to decide.
Be careful what you read on the news and all the Bitcoin-is-dead garbage. Bitcoin and blockchain are here to stay because we need to get trust back into our financial system and stop letting the price of everything be blurred by money that can be created out of thin air.
This article is for informational purposes only, it should not be considered financial, tax or legal advice. Consult a financial professional before making any major financial decisions.