What Crypto Insiders Think About Elon Musk's Bitcoin U-Turn

What Crypto Insiders Think About Elon Musk’s Bitcoin U-Turn

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Cyptocurrency enthusiasts got a nasty shock Wednesday when Elon Musk, founder of Tesla Inc. and the second-richest person on the planet, announced on Twitter that his automaker wouldn’t accept payment in Bitcoin any more due to environmental concerns. After all, this is the same man who just a few months earlier said Tesla bought into Bitcoin, to the tune of $1.5 billion. He tweeted “True” in response to a thread citing research that mining the token might actually spur the uptake of renewable energy, from Ark Investment Management LLC. Bitcoin mining is known to be energy-intensive, with the industry prizing cheap and plentiful power supplies. Read more: Bitcoin slid as much as 15% to nearly $46,000 before recovering. It was down 6.4% at $51,039 as of 2:45 p.m. in Hong Kong. Here’s what some people in the crypto industry have to say about the development: New Highs Await? “This may be the selloff that sets Bitcoin up for new all-time highs,” said David Grider of Fundstrat Global Advisors LLC. “We think the news is overblown and wouldn’t be surprised if Tesla is signaling plans to make crypto ‘greener.’” In a note Wednesday, Grider said Bitcoin has been consolidating for months as its market dominance has waned, but he’s still bullish, with a target of $100,000. Seeking an Explanation “The most logical answer is that he’s feeling pressure” from people who think “that one can’t be green and own crypto,” said investor Michael Terpin, calling that position “uninformed.” “First, there’s virtually no energy expending in SENDING Bitcoin; and the mining of new coins to keep the network secure is still a far lower amount of energy (and 70% of it from renewable sources) than the amount of energy expended to mine the world’s gold or power the global banking systems.” Watching Other Cryptocurrencies It wasn’t lost on some pundits that Musk might have his sights set on boosting a rival coin with a greener, perhaps even fluffier, profile. One of the most-liked replies on Twitter to Musk’s original statement was from Billy Markus, the co-creator of Dogecoin — the Shiba Inu-themed cryptocurrency that started as a joke in 2013. That token has become a favorite of Musk’s, and a darling among the retail set of investors and enthusiasts. “If only there was a merge-mined cryptocurrency that had a much smaller carbon footprint than Bitcoin, and also had a dog on it,” Markus said. Doesn’t Add Up “Broadly it’s a bit surprising given Tesla bought Bitcoin for their treasury in January and the argument is the same whether you’re using Bitcoin as a store of value or for transactional purposes,” said Vijay Ayyar, head of Asia-Pacific at Luno Pte., in an email. “So it doesn’t add up. Usually in such cases there are unknown motives at play.” It Can’t Be For some, the reaction bordered on disbelief. “Tell me your account got hacked without telling me your account got hacked,” said Yassine Elmandjra, crypto analyst at Ark, in a reply to Musk’s tweet. Chance to Buy “In retrospect, it was a great buying opportunity,” quipped longtime crypto enthusiast and co-founder of Gemini Trust Co. LLC, Cameron Winklevoss, on Twitter. — With assistance by Eric Lam, and Olga Kharif

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