Ever since Bitcoin was introduced in 2009, the graph of digital assets has been quite successful. Today, the cryptocurrency space holds a global market cap of $2 trillion. The global acceptance of the crypto space has skyrocketed during the pandemic year 2020, and the upward trajectory continues. There is a survey of conventional investors on adopting Digital Assets almost every day.
According to the RIA Digital Assets Council, while 80% of financial advisors get queries about bitcoin from customers, only 8% can accurately describe digital assets. Moreover, the need for financial advisors to develop expertise in cryptocurrency is quite crucial, as it becomes more common. Therefore, with so much happening in one of the most happening industries in the world, how could the second-richest man in the world miss out on the action? That’s right! Tesla and SpaceX CEO Elon Musk has left no stones unturned to show his influence over the crypto industry.
No one is unaware of the fact that Elon Musk is a big-time crypto supporter. Elon Musk often takes it to Twitter to show his support for digital assets like Bitcoin and Dogecoin. His one tweet turns the crypto space upside-down. In contrast, Bitcoin dropped as much as 17%, after Musk announced on Twitter his decision to suspend its use for Tesla cars, a month after announcing to accept bitcoin as payment for Tesla.
And recently, the price of Dogecoin soared after Musk tweeted that he was working with Dogecoin developers to improve the efficiency of transactions. On the contrary, developers say they had been working with Elon Musk since 2019. Despite this fact, Musk continues to make such ineffective decisions that are affecting the crypto market.
The price of the world’s largest cryptocurrency fell from about $54,819 to $45,700, its lowest level since March 1, after Elon Musk said Wednesday on Twitter that Tesla has “suspended vehicle purchases using bitcoin,” out of concern over “rapidly increasing use of fossil fuels for bitcoin mining.”
Other cryptocurrencies, such as Ethereum, dropped before regaining some ground in Asian trade. Tesla disclosed in a February SEC filing that it purchased $1.5 billion in bitcoin and that it would invest in more bitcoin or other cryptocurrencies in the future. At the time, the company stated that it would begin accepting bitcoin as payment for its goods. Musk said:
“We are concerned about rapidly increasing use of fossil fuels for Bitcoin mining and transactions, especially coal, which has the worst emissions of any fuel.”
Tesla intends to keep its Bitcoin assets and use the cryptocurrency until mining shifts to more renewable energy sources, according to Musk. Bitcoin is produced when powerful computers compete against each other to solve complex mathematical puzzles, an energy-intensive process that currently relies heavily on electricity generated with fossil fuels, especially coal.
At today’s costs, Bitcoin “mining” consumes about the same amount of energy each year as the Netherlands did in 2019, according to the most recently available information from the University of Cambridge and the International Energy Agency.
The use of Bitcoin to purchase Tesla’s electric vehicles revealed a contradiction between Musk’s image as an environmentalist and his use of his popularity and status as one of the world’s richest people to back cryptocurrencies. Some Tesla investors, as well as environmentalists, have been increasingly critical of the way Bitcoin is “mined,” which requires massive quantities of electricity produced using fossil fuels.
“Cryptocurrency is a good idea on many levels, and we believe it has a promising future, but this cannot come at great cost to the environment,” he tweeted. Tesla shares fell 1.25% after hours.
As the price of bitcoin rises, some critics have cautioned that the cryptocurrency consumes an unsustainable amount of electricity. New units of cryptocurrencies such as bitcoin are created through a digital method known as “mining,” which is a potentially lucrative undertaking that requires computers to run trillions of operations, consuming a lot of electricity. If more bitcoin is produced, mining new units become more difficult, necessitating more computing power and energy.
Tesla was unlikely to have sold many if any, cars using Bitcoin, according to Meltem Demirors, chief strategy officer at digital asset manager CoinShares Group, and the backflip created positive publicity while simplifying payment processes. “Elon was getting a lot of questions and criticisms and this statement allows him to appease critics while still keeping Bitcoin on his balance sheet,” Demirors said.
However, some investors, such as Softbank founder Masayoshi Son, are still skeptical of the cryptocurrency craze. “There’s a lot of discussion over if it’s a good thing or a bad thing, what’s the true value, or is it in a bubble. Honestly speaking, I don’t know,” Son said at a recent earnings conference.
The cryptocurrency community reacted quickly to Elon Musk’s decision late Wednesday to suspend bitcoin payments for Tesla vehicles due to environmental concerns, implying that renewable energy is mainly used to mine the famous cryptocurrency. Some of the top statements that reacted to Musk’s tweet are given below:
“Ironic because no incremental energy is used in a #bitcoin transaction. The energy is used to secure the crypto-asset network, and the net impact on fossil fuel consumption over time will be negative, all things considered.” – MicroStrategy CEO Michael Saylor.
“Elon probably did not research how much energy is required to run other (non-crypto) currencies that Tesla accepts.” – Binance CEO Changpeng Zhao.
“When Elon realizes that bitcoin mining is pushing the renewable energy industry forward, he will refresh position and #bitcoin will moon.” – co-founder and president at crypto exchange Gemini Cameron Winklevoss.
However, the reactions were mixed and some supported Musk’s decision.
“My take on @elonmusk is to take him at his word. He cares about the environment, and he is using his considerable influence to push BTC mining towards a greener future. Lots of companies in the space have already been working on this. Stay tuned. And buy $BTC.” – Galaxy Digital CEO Mike Novogratz.
And just as the crypto space was recovering from news the billionaire made another announcement on the meme crypto Dogecoin and made its price touch the sky earlier on Friday, 14th May.
On Friday, Dogecoin surged after Elon Musk said he was working with the cryptocurrency’s developers to boost its payment performance. Tesla CEO Elon Musk, who previously said that his Dogecoin tweets could not be taken seriously, said on Twitter that he was “working with Doge developers to boost system transaction performance” and that the work was “potentially promising.” So, that means he will only be investing his time and money in Doge from now on?
Following Musk’s tweet, the cryptocurrency, which was created as a joke in 2013, jumped over 30% on Friday morning. It was currently trading at $0.53, having previously hit a high of $0.56. This isn’t the first time Musk has mentioned using Dogecoin to make Tesla purchases. Earlier this week, the billionaire asked his followers on Twitter if they wanted “Tesla to embrace Doge,” and 78.2% said yes.
According to the report, Elon Musk also offered to finance the Dogecoin, however, the developers refused, instead requesting his guidance about how to boost the coin to make it a more environmentally friendly alternative to Bitcoin. According to TRG info, while bitcoin uses around 707-kilowatt hours per transaction, Dogecoin only uses about 0.12 because it uses fewer calculations to mine and exchange coins. Dogecoin, which was nearly worthless in late 2020, has risen to become the fourth-largest cryptocurrency by market capitalization, as per CoinMarketCap.com, and is up more than a hundredfold this year as speculators poured into the asset class.
SpaceX has previously stated that it will launch the “DOGE-1 Moon Mission” in the first quarter of 2022 and that it will accept Dogecoin as payment. The Dogecoin-funded mission was revealed by Geometric Energy Corporation on May 9th, but the mission’s financial value was not disclosed. Crypto trading sites and investors have become more interested as a result of Musk’s publicity. Following a similar move by rival eToro, famous exchange Gemini declared support for Dogecoin last week. The crypto has risen over 1,500% since the start of the year and Musk is largely responsible for this.
Nicoll stated that the team of four Dogecoin developers are hopeful that with Elon Musk in the frame, they would be able to further reduce the cryptocurrency’s energy usage, which is currently only 7% of Bitcoin, according to one estimate on Thursday.
Elon Musk is a big name. His one statement creates a huge impact in the world of crypto or any other industry. Such has been his influence that he has been able to make or break a cryptocurrency overnight. The CEO’s emphasis on making Dogecoin more competitive is likely to bolster support for the meme coin, which has already had a banner year. On the other hand, Musk’s funding, like bitcoin’s, could end up increasing Dogecoin’s carbon footprint by could demand. Also, it is possible that Musk may finally approve Doge as payment for Tesla cars. We just have to wait for another tweet from the billionaire.
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