Does Tesla's Bitcoin Purchase align with its Values?
Tesla and Bitcoin
One month ago Tesla purchased a massive 1.5 billion USD worth of Bitcoin. Tesla claimed that the Bitcoin purchase was meant to allow "more flexibility to further diversify and maximize returns on our cash." (Source 1). Tesla also announced it would be accepting bitcoin as payment initially on a limited basis, this would make Tesla the first major automaker to do so (Source 1). This may be a wise decision, considering that Bitcoin has risen from its 2010 price of around $0.10 to recently more than $50,000 per Bitcoin. Tesla's investors were warned of Bitcoin's volatile nature, but it seems to be doing well so far since Tesla had $1 billion USD in profits last month from its investment in Bitcoin (Source 2).
A maintained price of Bitcoin can be found here: https://www.coinbase.com/price/bitcoin
Criticism over the Bitcoin Purchase
Critics claim that Tesla's Bitcoin purchase clashes with Tesla's hope to create a world that focuses on using sustainable energy.
Bitcoin mining causes greenhouse gases to be produced and this invokes the climate-conscious to be concerned. Concerns over Bitcoin's energy usage have also arisen, since if Bitcoin were a country it would rank 30th in energy consumption (Source 3). Bitcoin's energy consumption has steadily risen, along with its price, since October (Source 3). Some have overpredicted Bitcoin's energy usage, as a 2017 study predicted that Bitcoin would consume all of the world's energy by 2020 (Source 7). You can access a sustained estimation of Bitcoin's energy consumption here https://cbeci.org/. Tesla driving Bitcoin's price higher and Tesla's publicity both can lead to an increase in Bitcoin mining. The higher the price of Bitcoin is, the more lucrative mining Bitcoin becomes. The majority of Bitcoin mining occurs in China and the United States (Source 4).
Tesla's Bitcoin purchase would be part of the companies indirect emissions and these also come from pollution along its supply chain and the usage of Tesla-related products (Source 3). You can find more information about Tesla's environmental impact here https://www.tesla.com/ns_videos/tesla-impact-report-2019.pdf, unfortunately, figures for indirect emissions are not included in Tesla's 2019 report https://www.tesla.com/ns_videos/2019-tesla-impact-report.pdf. Mining locations for Bitcoin tend to target cheap electricity and this does not discriminate between renewable or environmentally unfriendly sources (Source 6). Emissions from Bitcoin-connected activities total between 53 and 127 million megatons of carbon dioxide and this figure would make Bitcoin the 6th highest emitting country on Earth (Source 4). Bitcoin-connotated carbon dioxide production is more than the emission of 4 million gas-powered cars (Source 5). Many proclaim that Tesla's support of Bitcoin goes against their climate-friendly goals and values due to these figures.
Tesla's Response
Elon Musk, CEO of Tesla, has offered $100 million dollars for the best carbon capture technology. This may help offset those concerned about Tesla's Bitcoin purchase.
Elon Musk states that Tesla buying Bitcoin is not necessarily reflective of his own opinion, but is worth the test. He even sees Bitcoin as a more sensible currency than cash.
Some have argued that the entrance of large companies into the Crypto World will boost incentives for using renewable energy (Source 8). There has been no direct response from Tesla to its critics, yet it seems that Tesla has not had any major defocus on striving to make the world a greener place.
*Source 1 -* https://www.cnbc.com/2021/02/08/tesla-buys-1point5-billion-in-bitcoin.html
*Source 2 -* https://www.cnbc.com/2021/02/22/tesla-has-made-1-billion-profit-on-its-bitcoin-investment-analyst.html#:~:text=Menu-,Tesla%20has%20made%20about%20%241%20billion%20in,its%20bitcoin%20investment%2C%20analyst%20estimates&text=Tesla%20has%20made%20roughly%20%241,analyst%20at%20Wedbush%20Securities%20estimated.
*Source 3 -* https://www.theverge.com/2021/2/9/22275243/teslas-bitcoin-purchase-clashes-climate-change-mission
*Source 4 -* *https://www.washingtonpost.com/opinions/2021/02/18/bitcoin-emissions-pollution-tesla/*
*Source 5 -* https://www.latimes.com/business/story/2021-02-08/tesla-invests-in-bitcoin
*Source 6 -* https://cleantechnica.com/2021/02/19/musks-climate-damaging-bitcoin-gamble-risks-teslas-sustainability-reputation/
*Source 7 -* https://www.newsweek.com/bitcoin-mining-track-consume-worlds-energy-2020-744036
*Source 8 -* https://www.autoblog.com/2021/02/13/musk-bitcoin-energy-use/
Elon Musk and Dogecoin
Dogecoin is an altcoin that can be bought, sold, traded, and even mined much like Bitcoin. The algorithm for mining Dogecoin is known as Scrypt and the Block Reward (in terms of the number of coins rewarded) is much higher than Bitcoin (Source 1). If you want to get started mining Dogecoin then a Scrypt ASCI Miner, a piece of hardware specifically designed for mining Scrypt based currencies, is recommended.
Jackson Palmer and Billy Markus founded Dogecoin in 2013, hoping to create a more fun and friendly cryptocurrency coin (Source 1). Online communities, celebrities, and memes have all worked together to bring Dogecoin to the place it is today.
Elon Musk and Dogecoin
Elon Musk has had a major influence over the recent price fluctuations of Dogecoin. Last month the price of Dogecoin rose from $0.01 to almost $0.10 last month thanks to influencers like Elon Musk (Source 2). Elon Musk's tweets about Dogecoin seem to usually cause percentage jumps in Dogecoin's value. Elon Musk's tweet below caused the value of Dogecoin to jump almost 20% (Source 3).
Elon Musk does not stop there in promoting Dogecoin, he continues to positively impact Dogecoin adoption and value through memes and tweeting. Elon Musk seems to be quite aware of his impact on Dogecoin, as evidenced by the below tweet.
After a short twitter break, Elon Musk breaks his silence with a barrage of tweets about Dogecoin last month. Elon Musk causes around a 63% increase in the price of Dogecoin with his below tweets (Source 4).
A recent meme, posted by Elon Musk, pertaining to Dogecoin "on the moon" caused the cryptocurrency value to jump 25% (Source 5).
The influence Elon Musk has had on Dogecoin seems overall well received. A Dogecoin Twitter community, which at the time of this writing has around 650,000 followers, voted for Elon Musk to be the new "CEO" of Dogecoin.
Elon Musk's Dogecoin memes have inspired some to make memes of their own. The community seems to really be enjoying themselves along with Elon Musk.
Those who sold and made capital gains from the Dogecoin bulls are most likely pleased by Elon Musk's influence on Dogecoin. Long-term holders of Dogecoin may be disappointed and aggravated with Elon Musk if the Dogecoin craze dies off and a reduction in value follows.
Elon Musk and Scrutiny over Dogecoin Comments
Not everyone has been a fan of Elon Musk's influence on Dogecoin. Critics have accused Musk of tweeting about certain stocks and cryptocurrencies to deliberately benefit his friends (Source 4). This isn't the first time Elon Musk's statements have influenced the market, in January Musk tweeted "Use Signal" and caused shares of Signal Advance to soar 1,500% in 24 hours (Source 6). The irrelevant Signal Advance stock was influenced despite Elon Musk mentioning WhatsApp rival Signal, so in this case, Elon Musk certainly did not deliberately influence the market.
After Elon Musk added the word Bitcoin to his Twitter bio in January, Bitcoin's value elevated more than 20% (Source 7). In the case of both Dogecoin and Bitcoin, it is safe to say that Elon Musk meant to influence the market, or at least create more awareness about both cryptocurrencies.
Speculations have arisen that the SEC will investigate Elon Musk over his Dogecoin-related tweets despite no such investigation being confirmed by the SEC (Source 8). Elon Musk seems to be unphased, even welcoming of an SEC investigation as evidenced by the below tweet.
This would not be the first time Elon Musk has been in trouble with the SEC, in 2018 Elon Musk was fined 20 million dollars and made to step down as Tesla's board chairman after tweeting that he would take Tesla private (Source 8).
The Future of Elon Musk and Dogecoin
Elon Musk stated through the Clubhouse app that his comments about Dogecoin "are really meant to be jokes" (Source 8). Recently Elon Musk uploaded to Twitter about "Regretamine" that could remove all your regrets with one dosage (Source 9).
While the true intentions of Elon Musk's tweet are unknown, many in the comments drew their own interpretations. One is that those who sold Dogecoin too early or did not invest in it early enough would need "Regretamine" to drown out the regret of not purchasing Dogecoin. Elon Musk, in response to his own tweet, signifies that memes defend the value of Dogecoin.
Despite Elon Musk saying that his posts about Dogecoin are simply jokes, he states "The most entertaining outcome is often the most likely. Arguably the most entertaining outcome, and most ironic outcome, would be that Dogecoin becomes the currency of Earth in the future." (Source 9). Based on this statement, it seems that his posts are not fully comical. Maybe Elon Musk wanted more people to adopt Dogecoin to push Dogecoin one step closer to being Earth's future currency or at least a prominent one. Elon even bought some Dogecoin for his youngest child and supposedly set up some mining rigs for mining Dogecoin. I believe that both of these actions display the faith Elon Musk has in the future of Dogecoin.
Critics of Dogecoin have argued that Dogecoin does not have any real value or usage. Most of Dogecoin's value has seemingly come from meme culture and celebrity promotion. Meme culture has proven to be a powerful market force as evidenced by meme stocks and now meme-driven Dogecoin.
Final Thoughts and Remarks
Online communities have joined together to have a powerful impact on the value of Dogecoin. If the people want Dogecoin to have value, then it is certainly in their hands to give it value. If the value of Dogecoin ever does start to drop significantly, perhaps we can be assured that Elon Musk will drive up the price once again. https://www.reddit.com/r/dogecoin/ has a whopping 1.2 million members and this is where many come to talk, discuss, and meme about Dogecoin. If you found this article helpful or interesting, please show some support. You can find me on Publish0x by the same username as this account "Tupi", you can also support me by using my affiliate link (when signing up for Publish0x) ***https://www.publish0x.com?a=zPdy8VLzbQ***
*Source 1 -* https://www.bitdegree.org/crypto/tutorials/dogecoin-mining#:~:text=Note%3A%20In%202014%2C%20Litecoin%20and,now%20linked%20with%20Litecoin%20mining.&text=Mining%20Dogecoin%20is%20a%20lot%20faster%20than%20mining%20Litecoin%20or%20Bitcoin.
*Source 2 -* https://www.forbes.com/sites/billybambrough/2021/03/03/doge-meme-shield-tesla-billionaire-elon-musk-is-no-longer-boosting-his-fav-bitcoin-rival-dogecoin/?sh=5e5d11197477
*Source 3 -* https://medium.com/an-idea/how-one-tweet-from-elon-musk-spiked-a-cryptocurrency-by-20-1d31edc5c2ad
*Source 4 -* https://news.bitcoin.com/doge-token-pumps-after-elon-musk-tweets-dogecoin-is-the-peoples-crypto/
*Source 5 -* https://www.republicworld.com/world-news/us-news/elon-musk-says-dogecoin-literally-going-on-the-moon-the-cryptocurrency-jumps-25-percent.html
*Source 6 -* https://finance.yahoo.com/news/elon-musk-tweet-sends-this-stock-up-1500-in-24-hours-may-be-a-sign-of-market-bubble-175845075.html
*Source 7* - https://www.cnbc.com/2021/01/29/bitcoin-spikes-20percent-after-elon-musk-adds-bitcoin-to-his-twitter-bio.html
*Source 8 -* https://www.foxbusiness.com/markets/elon-musk-sec-probe-dogecoin-tweets-would-be-awesome
*Source 9 -* https://www.independent.co.uk/news/world/americas/elon-musk-regretamine-twitter-b1811623.html
Controversy over Bitcoin Energy Consumption
Prominent Figures on Bitcoin and Energy Consumption
Recently there has been a lot of talk about the massive amount of energy being consumed globally due to Bitcoin. President Biden's top economic advisor stated that Bitcoin is "an extremely inefficient way to conduct transactions" and "the amount of energy consumed in processing those transactions is staggering" (Source 1). Microsoft co-founder Bill Gates has also criticized Bitcoin as he states "Bitcoin uses more electricity per transaction than any other method known to mankind" (Source 2). As Inner Mongolia is pressured (by Beijing's energy consumption and energy intensity review) to meet its energy conservation goals, all new and existing bitcoin mining projects are expected to be halted (Source 3).
The amount of criticism of Bitcoin may have you worried, especially if you are a person who has invested a lot in bitcoin or actively mines it. Questions such as "will Bitcoin mining be forcibly limited?" or "will the criticism of bitcoin cause fluctuations in the market?" may arise. You might even relate with Bill Gates, that Bitcoin is not good for climate change and question the sustainability of Bitcoin.
A Look at the Data
With all the controversy around Bitcoin and energy consumption, one may want to know the real energy cost of Bitcoin. It is not possible to provide an exact answer as to how much energy Bitcoin-related activities consume, but bitcoin does consume a "similar amount of power as the Netherlands" (Source 1). Bitcoin has also been compared as having more electricity consumption than other countries such as Switzerland and the United Arab Emirates.
With many sources of energy consumption comes a carbon footprint. Those having favor for Bitcoin have been quick to point out that Bitcoin does not produce as many emissions as other technologies. Cryptocurrency analytics firm Arcane research finds that Bitcoin only contributes to 2.3% of digital tech emissions (Source 4).
When compared to the entire industry of digital tech, Bitcoin does not have too much of a carbon footprint. People on the positive end of the Bitcoin debate express concerns that Bitcoin is criticized more heavily than other wasteful applications.
The Future of Bitcoin
Right now the Bitcoin energy debate hinges on three main points. The first point being if it is worth spending energy on a non-state currency. The second being that Bitcoin can be a sound currency for those living in places with less fortunate banking or monetary systems. Debaters have also mentioned that Bitcoin can help free oppressed people from perceived tyrannical monetary practices (things such as freezing bank funds, seizing money... etc). The final and third point focuses on current and the proposed future energy costs of Bitcoin-related activities (Source 6). This argumentative point can make those who are defensive of Bitcoin point at other industries that use a lot of energy (game consoles, Christmas lights, Data Centers... etc). Some have even stated that arguments against Bitcoin just exist to start trouble or as an attempt to completely eliminate Bitcoin.
Energy consumption that comes from the issuance of new Bitcoins will decline over time. Only 21 million Bitcoins can be issued and the process is close to 90% done. Do not let Bitcoin's carbon footprint deceive you, as over 75% of Cryptocurrency Miners use renewable energy sources (solar, wind, geothermal, hydropower... etc) (Source 7). Researchers Yo-Der Song and Tomasto Aste state "Despite a 10-billion-fold increase in hashing activity and a 10-million-fold increase in total energy consumption, we find the cost relative to the volume of transactions has not increased nor decreased since 2010." (Source 8). Considering this, Bitcoin transactions may be less inefficient than some critics think.
Final Thoughts and Remarks
Whatever your thoughts are on Bitcoin, if the current carbon footprint and energy consumption are acceptable to you or if they are unacceptable, then you should consider that the criticism of Bitcoin will lead to the influence of Bitcoin's price. Hopefully, more miners will use clean energy to alleviate environmental concerns. Perhaps those who defend Bitcoin will come out on the winning side of the argument. Decreased coin issuance may correct the Bitcoin energy issue altogether. Please leave a tip if you found this article helpful and be sure to check below for sources. I am also on Publish0x and you can earn crypto for reading/writing here, ***https://www.publish0x.com?a=zPdy8VLzbQ***
Source 1 - https://finance.yahoo.com/news/bitcoin-energy-bigger-most-countries-002222463.html
Source 2 - https://www.popularmechanics.com/science/a35717144/bill-gates-bitcoin-energy-climate/
Source 3 - https://www.scmp.com/economy/china-economy/article/3123633/bitcoin-mining-northern-chinese-province-be-halted-amid
Source 4 - https://finance.yahoo.com/news/bitcoin-uses-more-electricity-method-104051222.html
Source 5 - https://www.cnn.com/2021/02/23/investing/bitcoin-prices-fall-yellen-gates/index.html
Source 6 - https://www.coindesk.com/frustrating-maddening-all-consuming-bitcoin-energy-debate
Source 7 - https://news.bitcoin.com/bitcoin-energy-consumption-is-far-more-efficient-and-greener-than-todays-banking-system/
Source 8 - https://www.frontiersin.org/articles/10.3389/fbloc.2020.565497/full
