The multiple impacts of Musk's defection: Bitcoin has lost its most important supporter

Wu said author | Colin Wu

Editor of this issue | Colin Wu

Bitcoin appears to have lost its most important supporter.

On May 13, Musk suspended Tesla's support for Bitcoin payments because Bitcoin consumed too much fossil energy. He then cited Cambridge data and said that Bitcoin's rapidly growing energy consumption was crazy. For a time, everyone in the cryptocurrency circle criticized Musk, and Zhao Changpeng even unfollowed him. On May 16, Musk tweeted that "Dogecoin is better than Bitcoin" and said that he would reduce Dogecoin fees by 100 times.

Musk's original text was translated again: "Tesla has stopped using Bitcoin to buy cars. We are very concerned about the rapid growth of fossil energy in Bitcoin mining and transactions, especially coal, which produces the worst emissions of any energy source. Cryptocurrency is a good idea in many areas, and 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, and when it uses more green energy, we will try to use it for transactions. We are currently looking for cryptocurrencies that use less than 1% of Bitcoin's energy consumption."

The significance of Musk's "defection" from Bitcoin cannot 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. In terms of economics, Bitcoin uses fossil energy, which is more stable and better. In the foreseeable future, Bitcoin mining cannot get rid of the stable supply of fossil energy. Even if major countries such as the United States and China gradually reduce fossil energy, it is impossible to stop in Central Asia and the Middle East. 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 cryptocurrency circle are reluctant to admit it, Musk, as the world's richest man and the most popular online celebrity, has a significant impact on the rise of Bitcoin. On January 29, F2Pool even wrote Musk's tweet into the Bitcoin block to pay tribute to his contribution to the Bitcoin community. This seems ironic today. On May 14, Zhao Changpeng tweeted that he had unfollowed Musk.

From the timeline: On January 29, Musk’s signature was changed to Bitcoin (Bitcoin was 33,000 US dollars); on February 8, Tesla announced that it would spend 1.5 billion US dollars to buy Bitcoin (Bitcoin was 42,500 US dollars); on March 24, Tesla announced that it would support Bitcoin payments (Bitcoin was 54,500 US dollars); on April 24, Tesla announced that it would sell 10% of its Bitcoin (Bitcoin was 51,100 US dollars); on May 13, Musk attacked Bitcoin for consuming too much fossil energy and stopped Tesla from supporting Bitcoin payments (Bitcoin was 50,000 US dollars); on May 16, Bitcoin fell below 47,000 US dollars. Every important move by Musk has obviously stretched or reduced Bitcoin by 5%-15%.

Third, Musk's "revealing" of Bitcoin's environmental issues is of far-reaching significance. In history, Bitcoin has never received such strong support from such a heavyweight. It is a pity that Musk's four-month support disappeared so quickly. Environmental protection is almost a "politically correct" issue similar to gender and race in Western society. Previously, Bitcoin's environmental issues have been buried underground. Musk's public and continued opposition means that the possibility of support from other elites 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, and environmental issues have begun to receive more and more attention in Western society. In the worst case, the story of Bitcoin has been damaged, and it may even lead to a significant reduction in the willingness of institutions to buy, which is the driving force of the current bull market in Bitcoin. Carbon emissions and environmental protection The biggest threat to Bitcoin mining in the future may be groundless worries. How to deal with it

The reason why it is a political issue is that it is meaningless to rationally discuss the energy consumption of Bitcoin, the banking system, and gold. Musk can write the story of Bitcoin into the mark of "unfriendly to the environment" by posting a picture with confusing data. In the future, every institution will have to weigh it before purchasing, and may even be protested by environmentalists.

Fourth, Musk is still an avid supporter of Dogecoin. He recently said that he is helping to improve the Dogecoin trading system, which can increase the speed and size of Dogecoin blocks by 10 times and reduce the handling fee by 100 times. Previously, SpaceX said that Dogecoin will become the universal currency of the universe. Musk said that he is looking for cryptocurrencies with energy consumption less than 1% of Bitcoin. This means that MEME and even POS currencies may get his support. Maybe Musk's interest in cryptocurrencies has not changed. If Musk clearly supports Ethereum, it may accelerate Ethereum 2.0 and surpass Bitcoin in market value as soon as possible.

Conclusion: Although people in the cryptocurrency circle have changed from early praise to cursing Musk, we cannot agree with Musk's "crazy" operation. As netizens questioned, is Tesla's electricity all clean energy? However, his defection does seem to be a sign of the current bull-bear transition. In addition, environmental issues will bring great changes to Bitcoin and the mining industry, which is also a new problem that will inevitably arise after Bitcoin enters the field of vision of institutions and elites.