If you own Bitcoin you are probably asking yourself that very question.
Elon Musk’s environmental concerns over Bitcoin mining have seemingly promtped him to perform a massive hand brake turn. Who said billionaires don’t have a conscious. In a recent tweet, he reversed his March decision to accept Bitcoin as a means to purchase a new Tesla. And not for the first time, a tweet from Elon Musk has spooked financial markets, with Bitcoin alongside other cryptocurrencies and his own Tesla stock suffering the biggest loses.
Musk’s rationale for freezing purchases in Bitcoin is a valid one. The energy consumption required to mine Bitcoin, specifically the reliance on fossil fuels, is at odds with the environmental credentials of Tesla. A recent study by the University of Cambridge estimated that 0.5% of global energy consumption was now being diverted to mining Bitcoin. That’s a staggering 121.36 terawatt-hours of energy that is being consumed annually, which is more energy than countries like Holland, Argentina and United Arab Emirates consume. And that figure is likely to rise as the financial gains at stake are now big business.
Crucially though, the vast majority of Bitcoin mining operations are coming from countries that have an over reliance on fossil fuels such as China and North Korea and it is this fact that has drawn the eye of environmentalists and governments alike. But this was already well known before Musk purchased $1.5billion worth of Bitcoin in February. That move by the Tesla and Space X founder caused Bitcoin to surge in value from $40,000 to well over $60,000. The reversal of that decision has had the opposite effect and those dramatic gains have begun to free fall.
So what exactly is Elon up to now.
It could be that Musk’s actions of driving Bitcoin “to the moon” and subsequently causing it to parachute back to earth before it left earth’s orbit was part of an elaborate ruse. Tesla stands to win big as more and more people transition to electric vehicles and cleaner technologies they are pioneering. So shining a massive light on the environmental issues caused by mining isn’t a stretch on the imagination.
It’s also likely that investors would have been questioning the move to go big on Bitcoin, especially as Tesla promotes cleaner technologies and many of the institutional investors are focused on sustainability and climate change.
Or it could just be that Elon Musk has once again decided to wield his enormous power and influence over the cryptomarkets like he has done so many times before. But at the end of the day, the people who will likely lose out in the latest episode of “Elon Tweets” will be the bedroom investors who marched up the hill with Musk believing the hype he created in Bitcoin and lesser known joke coins like Dogecoin.
Who knows for sure what goes through Elon’s head. But don ’t be surprised if we get another tweet in the coming weeks to say that Bitcoin will be accepted as a form of payment for the first commercial flights “to the moon” in 2030.
Written By: Simon Bailie
