European, American and Japanese media advise everyone to calm down: Musk is a fool for making a profit of $2.5 billion and causing overheated digital currency investment

Author: Maori Goro Source: Liandede

The Financial Times published a commentary on the 14th, analyzing the various "stupid behaviors" of Tesla CEO on Twitter in recent days. Musk has been "abnormal" since January, when he invested $100 million in new technology to recycle offshore carbon dioxide.

The most well-known one may be Musk's endorsement picture of Dogecoin. He has always "endorsed" digital currencies such as Bitcoin in a joking tone. This time he announced that he expects to approve the purchase of Tesla with Bitcoin.

On the 8th of this month, Tesla submitted information to the U.S. Securities and Exchange Commission showing that the company has invested $1.5 billion in Bitcoin in the digital currency field. Although $1.5 billion is less than 1% of Tesla's total value, it is also less than 10% of Tesla's cash balance at the time.

Bitcoin big players bombarded

The $1.5 billion purchase of Bitcoin is dwarfed by MicroStrategy's Michael J. Saylor and a drop in the bucket compared to other major Bitcoin holders.

Let’s take a look at MicroStrategy, which also filed its financial report with the SEC on February 8.

Data shows that since August 2020, Saylor has purchased 25,000 bitcoins for $250 million. According to the data he submitted to the SEC, Saylor has purchased $1.125 billion worth of bitcoins at an average price of $16,000.

If Saylor had held on to these 70,000 bitcoins, based on the nearly 314% increase in Bitcoin's value, this $1.125 billion investment would have appreciated to $3.67 billion from all the bitcoins he purchased, with a net profit of $2.545 billion.

After the data was made public, MicroStrategy announced on February 17 that it planned to issue $600 million in convertible bonds to purchase Bitcoin.

With the support of 21st century god-level entrepreneurs such as Musk and Saylor, as well as Tesla as a new energy vehicle giant that has received much media attention in the past 10 years and the much-touted MicroStrategy, mainstream digital currencies represented by Bitcoin began to take off after being bombarded with several messages. According to Dede data monitoring, as of press time, Bitcoin once exceeded US$58,000 per coin, and fluctuated sharply with a daily increase or decrease of about 20%.

Musk chooses to bet on human nature in order to balance risk aversion with criticism for his brutal move

However, the Financial Times said that Musk's move would bring negative brand suicidal effects to Tesla, with the biggest argument being that Bitcoin and Tesla are incompatible. The Financial Times wrote:

There is a problem here. Cryptocurrency adoption and environmental protection are unlikely to go together. Bitcoin brings a heavy burden to the environment, and Mr. Musk will make things worse.

The huge consumption of electricity that may be caused by mining has attracted the attention of environmentalists. Dutch economist Alex De Vries estimated that the global mining energy consumption reaches 78 megawatt-hours per year, which is equivalent to the total annual electricity consumption of Chile in South America, which has a population of about 20 million. The electricity used in a single Bitcoin transaction is equivalent to the electricity used for 436,000 payments using Visa cards.

There is no doubt that the rise in Bitcoin prices will encourage new miners to continue to increase mining, and everyone is likely to blame the environmental pollution caused by mining on Musk, the "culprit" of this round of Bitcoin surge.

Tesla currently has an excellent score of "Single A" in MSCI's ESG (Environmental, Social, and Governance Index) rating, which is also the foundation of Tesla's survival. Once it enters the Bitcoin field as Musk said, it will definitely attract criticism about the value of Tesla.

However, how many of the real digital currency trendsetters actually look at the atmosphere? It may only affect Tesla's sales.

However, some professionals said that it is wise to use digital currency as a company-level strategic risk avoidance. After all, under the COVID-19 pandemic, a single investment portfolio is not safe for any company. As emerging startups, Tesla, Google, and Amazon are most likely to gain the approval of shareholders, who need and are more likely to support new things.

Regardless of how a person or company involved in digital currency investment acts, it is undeniable that Bitcoin has been recognized worldwide and has become one of the inevitable blue oceans in the financial market.

The uncertainty brought about by the economic recovery in Europe and the United States makes digital currency a way to avoid risks

With the popularization of vaccines, the number of new coronavirus infections has been declining, and there is hope for economic recovery in Europe and the United States. For example, restrictions on store business hours have also been relaxed across the United States.

Long-term interest rates in European and American financial markets are rising. The yield on U.S. 10-year government bonds reached 1.35% on the 19th, the highest level in a year.

However, inflation expectations are also rising, with the bond market predicting prices will rise by 2.2% over the next 10 years. U.S. Treasury Secretary Janet Yellen stressed the need for strong economic measures in an interview with CNBC on the 18th, and Federal Reserve Chairman Powell also clarified his stance on supporting the economy through monetary easing.

It can be said that the United States is under tremendous policy pressure right now and cannot afford to make any mistakes.

As of last Friday, the 19th, both the Dow Jones Index and Bitcoin were at all-time highs. If interest rates continue to rise, the government may take action to adjust them.

Ordinary people are not very receptive to payment, and senior management has no expectations for payment

Data from a survey conducted by Susquehanna International in December 2020 of more than 120 small business owners showed that more than 70% of respondents said they would accept Bitcoin as a payment method if PayPal or Square introduced digital currency.

However, a survey of U.S. consumers found that nearly half said they would not use cryptocurrencies to purchase products or services. The same survey indicated two main reasons why consumers avoid cryptocurrency payments.

The first is that the price fluctuations are too large. Taking the relatively stable Bitcoin as an example, the price fluctuations may exceed 20% per day. If the price of the asset rises, it will be difficult to use it as a payment method.

Second, the related fees are actually high. According to the cryptocurrency information website Bit Infocharts, the current median transaction fee is about $5.40 per transaction, and the average transaction fee is more than $11. Uber Technologies CEO Dara Khosrowshahi told CNBC on the 11th that he would "consider using virtual currencies and Bitcoin as transaction currencies," but it is not attractive to consumers in daily shopping.

Raj Damodaran, head of blockchain and digital assets at Mastercard, said that hundreds of digital currencies have no legal status, which makes it difficult for digital currencies to enter the payment market.

Although Canada has approved Bitcoin ETFs, allowing more retail investors who do not need to hold coins to enter the market, please refer to [ChainDD Exclusive] Canada approves Bitcoin ETFs, opening a new chapter in digital currency trading . However, the management's recognition of Bitcoin seems to be limited to the investment field, and there is no hope for the landing of digital currency scenarios. Tim Lane, deputy governor of the Bank of Canada, said on February 10 about the soaring price of Bitcoin: "This is just a kind of speculation to bring enthusiasm. (Digital currency) has no future as a means of payment."