Bitcoin seems to have lost its most important supporters.
On May 13, Musk suspended Tesla’s support for Bitcoin payments because Bitcoin consumes too much fossil energy. Later, citing Cambridge data, saying that Bitcoin’s rapid growth in energy consumption is crazy. For a while, everyone in the currency circle verbally criticized Musk, and Zhao Changpeng even cancelled his attention. On May 16, Musk stated in a tweet that “Dogecoin is better than Bitcoin” and stated that he would reduce the Dogecoin fee by 100 times.
Musk’s original translation once again: “Tesla has stopped using Bitcoin to buy cars. We are very concerned about the fast-growing fossil energy in Bitcoin mining and trading, especially coal, which generates the worst emissions of any energy. Cryptocurrency is a good note in many areas. We believe it has a bright future, but we cannot accept such a large consumption of the environment. Tesla will not sell any Bitcoin in the future, when it uses more green energy At the time, we will try to use it for transactions. We are currently looking for a cryptocurrency that uses less than 1% of the energy consumption of Bitcoin.”
The significance of Musk’s “defection” to Bitcoin should not be underestimated.
First of all, it is unlikely that Musk will change his attitude again. He may no longer be a strong supporter of Bitcoin. Economically, Bitcoin’s use of fossil energy is more stable and better. In the foreseeable future, Bitcoin mining will not be able to get rid of the stable supply of fossil energy. Even though the United States, China and other major countries continue to reduce fossil energy, Central Asia, the Middle East, etc. It is impossible to stop. Currently Tesla still holds more than 40,000 bitcoins. Musk said he would not sell, but the company’s real money may not be Musk’s personal decision.
Second, although people in the currency circle don’t want to admit it, Musk, as the world’s richest man + the number one internet celebrity, has a significant role in promoting Bitcoin. On January 29, F2Pool even wrote a tribute to Musk’s contribution to the Bitcoin community by writing his tweets into the Bitcoin block. This seems ironic today. On May 14th, Changpeng Zhao tweeted that he had cancelled his attention to Musk.
From the perspective of the timeline: on January 29, Musk’s signature was changed to Bitcoin ($33,000 in Bitcoin); on February 8, Tesla announced that it would spend $1.5 billion to purchase Bitcoin ($42,500 in Bitcoin); On March 24, Tesla announced that it supports Bitcoin payments (Bitcoin: 54,500 USD); on April 24, Tesla announced that it sold 10% of Bitcoin (Bitcoin: USD 51,100); May 13 Musk attacked Bitcoin consumes too much fossil energy, and Tesla stopped supporting Bitcoin payments (Bitcoin 50,000 US dollars); on May 16, Bitcoin fell below 47,000 US dollars. Every important action of Musk has clearly stretched or reduced Bitcoin by 5%-15%.
Third, Musk’s “revealing” of Bitcoin’s environmental protection issues is of far-reaching significance. In history, Bitcoin has never been supported by such a heavyweight. It is a pity that Musk’s four-month support disappeared so quickly. Environmental protection in Western society is almost a “political correctness” issue similar to gender and race. Prior to this, Bitcoin’s environmental protection issues have been buried in the ground and have not been caused. Musk’s open and continuous opposition means that the possibility of other elites’ support will also be relatively small.
One reason is that since last year, mining has shifted from China to the United States. American Bitcoin listed companies have bought most of the newly produced mining machines. Environmental issues have begun to attract more and more attention in Western society. From the worst point of view, the story of Bitcoin has been compromised, and it will even lead to a significant reduction in the purchase intention of institutions, the source of the current bull market in Bitcoin.
The reason why it is a political issue means that it is of little significance to rationally discuss the energy consumption of Bitcoin and the banking system, and the energy consumption of gold. As long as Musk posted a picture of messy data, he could write the story of Bitcoin into the mark of “environmentally unfriendly”. In the future, every institution will have to weigh it when buying, and it may even be protested by environmentalists.
Fourth, Musk is still an avid supporter of Dogecoin. He recently stated that he is helping to improve the Dogecoin transaction system, which can increase the speed and size of Dogecoin blocks by 10 times and reduce the handling fee by 100 times. Previously, SpaceX stated that Dogecoin would become the universal currency. Musk said he is looking for a cryptocurrency that consumes less than 1% of Bitcoin. This means that MEME currency or even POS currency may be supported by him. Perhaps Musk’s interest in cryptocurrencies has not changed. If Musk clearly supports Ethereum, then it may promote the acceleration of Ethereum 2.0, and the market value will surpass Bitcoin as soon as possible.
Conclusion: Although people in the currency circle have changed from early praises to swearing at Musk, we cannot agree with Musk’s “crazy” operation. Just as netizens questioned, does Tesla use clean energy for all its electricity? The rebellion seems to have indeed become a sign of this round of bull-bear conversion. In addition, environmental issues will bring great variables to Bitcoin and mining. This is also a new problem that will inevitably appear after Bitcoin enters the vision of institutions and elites.