So what changed? Well I think the biggest notable difference between then and now is then bitcoin seemed to be going only up. Now it seems to be going down. When bitcoin continues to steadily go down, it is a significant concern because Tesla will have to take losses on the cars it sells and will have reduced gross margins, which will result in their stock price tanking.
Musk smartly decided he did not want to risk his half a trillion dollar company on random bitcoin fluctuations. It is probably the right decision (although certainly covered up with false reasoning) but he should have never reached this stage. Tesla should have never taken bitcoin without provisions for automatically converting it into one of the currencies it pays its costs in.
Thats not a notable difference - it goes up and down all the time. Its renowned for its volatility. You can hardly say 'bitcoin seemed to be going only up' with a straight face - its been a rollercoaster since day 1.
It's had a few sharp downs. It's had a few long plateaus of a year or so.
But - from the perspective of yesterday going back a few months - it certainly seemed to only go up.
If the S&P was up over 59,000,000x in 12 years, people would say the S&P only goes up... I mean, they already say "stonks only go up".
I seem to remember that back then it was more "When you're down so low, the only way is up".
I should have grabbed a few score of those BTC for pocket change, but did not bother. Yeah, I know.
On the other hand, Tesla is unique in that it literally went out and bought bitcoin to just sit on it, which is incredibly dumb.
Look at the price when Tesla announced they bought bitcoin worth about a billion dollars. Even after the current fall, the price now is way higher than back then.
Just the way Musk has been able to manipulate the whole market after investing his? and Tesla's money is just extraordinary.
It was a strategic investment which has reaped money like anything in such a short span and they even used part of it to generate a positive component to their balance sheet in last quarter.
Elon took a relative small bet by been the first mayor company to buy massive amounts of crypto and so far he has made bank. Only the future will tell if it was a good move in the long run.
Step 1: purchase $1.5Bn in Bitcoin
Step 2: make an announcement that will likely result in a rising valuation (it briefly went up by ~20% just because Musk added #bitcoin to his bio on Twitter...)
Step 3: sell 10% of your bitcoin at a profit of >$272M in Q1
Step 4: wait for the market to go up again, then proceed with Step 3
It's less risky to invest in a highly volatile, unregulated market if you have the means to somewhat steer the market just by making an announcement or have your company's figurehead add a hashtag on Twitter...
“Private-equity firm revives zombie fossil-fuel power plant to mine bitcoin”
https://arstechnica.com/tech-policy/2021/05/private-equity-f...
On another note, I don't think anybody was able to buy a Tesla with Bitcoin. This was a false claim that never came to fruition. Some serious market manipulation here by Tesla and Elon.
If we were talking penny stocks, this is classic pump and dump behavior that should result in jail time.
I mean how much attention does one person need.
It's not going to matter. If Bitcoin is going down persistently it means we're on the back side of this global asset mania (which the commodity bubble may be signaling, that we're in or close to the 9th inning), and Tesla's stock is going with it under all scenarios. $900 to $589 is already telling an obvious story.
Granted it's not just Tesla's bubble that is well over, the cloud bubble has ended as well (just wait until you see how low eg Snowflake goes, top to bottom).
Amusingly, Bitcoin is likely to hold its value better than Tesla, in the case of the asset bubbles giving out. The market will look to value Tesla a bit closer to fundamentals (already happening), which is another 70-90% down for Tesla. At some point Tesla will be valued based on cashflow, profit production, and they'll never be able to support a $500b valuation; whereas Bitcoin can support something like a trillion dollar valuation globally (even if it takes more time to hold that ground persistently).
I can't wait to go value hunting in the cloud again, as in March of 2020. Tesla won't be on that shopping list.
I guess we might know if Musk sells his coins.
(And no--I have no evidence. I just know wealthy boys get information. Even the people who didn't like Musk did 180's after his ingratiating performance Saturday Night Live. For the record, I have always liked Musk.)
From a BTC perspective USD is very volatile!
The amount of BTC Tesla could take in was likely only to be a small fraction of the amount they already hold. The terms were terrible for buyers, since TSLA forced them to take the downside risk on BTC movements.
Pretty sure he saw this now deleted thread on Reddit /r/dogecoin
https://www.reddit.com/r/dogecoin/comments/nb1rki/cryptocurr...
From ElegantPoop:
> Well, it would appear by this image we have ourselves a sub 1% of bitcoin per transaction. Winning.
Winning indeed.
"Hey, poppa, why is our currency named doge coin?"
'Well son, a long time ago there was this really cute shiba inu that became a bit of a meme and then the internet happened.'
TSLA appears to follow the same curve as BTC ... but either way it doesn't make sense, because if you accept BTC payments, you can instantly transfer them to cash if you don't trust BTC.
The company probably made a lot of money with this maneuver.
You mean just over the last month?
Now it seems to be going down. When bitcoin continues to steadily go down, it is a significant concern because Tesla will have to take losses on the cars it sells and will have reduced gross margins, which will result in their stock price tanking.
They can always price cars based on BTC's price and liquidate it to fiat or cryptocurrency of their choice.
Btc swings can be +/-20% a day, so not exactly a great comparison.
Also currency hedging is a thing that many companies employ to normalize profits. I’m sure there’s a BTC equivalent for this but the volatility would make it unreliable most likely
That's not "a few basis points"
so musk realized finally that bitcoin is volatile. he's an idiot. his stupid appearance on snl confirms this perspective for me. why are so many people listening to this dimwit. he has nothing of value to offer or say. he should keep his stupid mouth shut. he's worse than trump in that regard.
Except that's actually what he did, so if it was smart, then he didn't believe he was risking his business on it. Many, many retailers already stopped accepting bitcoin for this exact reason, so either he's not smart, according to your logic, or he had ulterior motives, which must somehow be smarter than the surface appearance of it. It can't be both.
Here's what changed: Your perception of him.
You think he has anyone's interest at stake but his own. He does not. He will throw anyone under the bus for his whims, even the entire planet. He disparages and slanders people rescuing kids from a cave.
> covered up with false reasoning
Um, do you mean a lie? This is all so juvenile. Are you afraid he's going to say, "What are you calling me a liar?"
Yes. You're calling him a liar. He's a liar. That's what he is.
What else is he lying about? He has proven, unequivocally, that he is willing to ruin people for profit.
He's not doing well for human beings and he is actively betraying people who want to help humanity. When the truth can no longer be denied, all of those Tesla buyers are going to have some real egg on their faces. When Tesla goes under and they all stop working. It's just a matter of time.
The amount of catastrophe that has already been created by this man is, as of yet, unimaginable. It is indefensible.
> he should have never reached this stage
We agree on that.
1. Buy $1.5 billion in BTC
2. Announce TSLA will accept BTC, with the knowledge that very few people will actually do that, and public support from a major company will drive up the price of BTC.
3. Sell off your BTC at the higher price. A portion was sold in Q1 for a hefty profit already.
4. Rinse and repeat with DOGE?
The environmental impact was well known before they bought it, so it's a little odd that they'd reverse course because of that.
I wonder if the original decision to accept bitcoin was a quick decision by the CEO, but now the rest of the company and the shareholders have persuaded them it isn't a public relations risk they should be taking. Imagine the headline - "Every Tesla EV bought with bitcoin gives off more CO2 than a gas car!"
Crypto is an unregulated market with ridiculously high volatility and announcements or big buy-ins are a relatively safe method of controlling the price (to a degree).
It's a win-win in the eyes of the management - great PR ("see - they DO care") and dropping crypto prices...
Edit: Yes, technically it’s future tense, but I’d be surprised if there were going to declare this without also disclosing any material amount they’ve already disposed of. It would do wonders for any charge of pump and dump.
The statements is about their intentions for the future, it's not about what they did or did not.
I have no idea what the true motivation for Tesla accepting bitcoin was. But I would be surprised if a publicly traded company took this much risk for such a relatively small amount
[1] https://old.reddit.com/r/dataisbeautiful/comments/n0jxyt/tes...
comparing the earnings to their market cap makes no real sense. Comparing to their existing earnings or profitability of their existing investments makes way more sense.
The real reason is likely to be that few, if any, cars were bought with bitcoin.
This has been a recurring theme throughout Bitcoin's history that's played out hundreds of times in more or less the same way. Merchants discover Bitcoin, and think it is a (VISA|PayPal|Checking|etc.) replacement. Then they try using it that way. They're shocked to find very low to non-existent transaction volume.
When Bitcoin does work, it's in situations in which those making the payment have few other options. They're blocked from taking credit card payments or interacting with the banking system. It's easy to dismiss those use cases, but they're real.
> ... we intend to use it when mining transitions to more sustainable energy.
Makes no sense. Numerous articles document Bitcoin's energy sources, which are often hydroelectric due to its low cost.
The part about other cryptocurrencies using less energy is pie in the sky reference to proof-of-stake. Its security model has yet to be proven on any network worth discussing. Those claiming otherwise are selling snake oil.
All of this reveals a surprising lack of sophistication in the approach taken by both Tesla and Musk.
It's so easy to assert and so comforting to believe, but is it true?
Just in this thread alone there are two articles already, one from the Financial Times, one from ARS Technica, which say the opposite. And personally, it's hard for me to believe that people who are keen on maximizing profits in pretty much its purest form--cryptocurrencies are literally burning resources for money, directly--would not take the opportunity to take whatever energy source is available in order to convert the generated energy into money in their bank account or crypto wallet.
At astronomically low efficiency, too. Because in proof of work, all calculations per block are entirely wasted... until the very last one where you managed to hit the right hash.
Primarily based in a country which is also the world's largest consumer of coal
> Its security model has yet to be proven on any network worth discussing. Those claiming otherwise are selling snake oil.
If there are specific problems worth raising about PoS, please share them, I'm sure plenty of folk here would love to learn what they are.
My take is that it's probably an ESG thing, perhaps some funds voiced their concerns about the potential for Tesla stock to hurt their ESG ratings. There was never any question of whether holding and transacting in Bitcoin would eventually start appearing on the same page as Greta Thunberg, the only question was when. It seems Musk just drastically accelerated this outcome.
Tesla's engineering team received experienced in supporting Bitcoin for payments and treasury management. Tesla received quite a bit of PR for accepting Bitcoin. Selling Bitcoin also net Tesla a substantial ($101 million) profit. It is said Tesla does not have a marketing department, but it is marketing itself just fine. You don't give Musk enough credit, he knows what he's doing.
1) Purchases with Bitcoin are a capital gains tax event. Or they might be? I can't be arsed figuring that out. It's hard to blame Bitcoin for this one.
2) There are not enough things that I am conveniently able to purchase with bitcoin for me to go full bitcoin (e.g. accepting salary payments in bitcoin)... This is a network effect thing. Every alternate payment system has to solve this problem.
1 is a massive barrier to solving 2. Regulatory environment needs to be fixed first.
Yep. There’s no way I would ever use crypto currency as a day to day currency.
For #2, I can't see companies offering to pay employees in BTC - it opens them up to too much legal risk.
It doesn't matter if the rest of the country isn't also on hydro. Currently mining just takes the green energy capacity away from non-mining use, which never went away.
Bitcoin works remarkably well for shady activities. Ransomware payments, human trafficking, blackmarket dealing, drug smuggling, money laundering, and other illegal activities are worth mentioning.
Not really. Leaving a permanant transaction history of one's crimes in the hands of multiple 3rd parties potentially for thousands of years doesn't work out too well if anyone is interested in prosecuting said crimes in the future.
Unless it was a pump and dump scheme. Granted, he says they won't be selling it until later, but they can just say they've decided it'll never be viable later, then sell it. This tracks with your statement that mining transactions using more sustainable energy doesn't make sense.
Since crypto isn't regulated by the SEC, it seems like leveraging Tesla for a pump and dumb to generate capital is _not illegal_.
It's really hard to argue Tesla's surprise here. (Elon Musk actually replied to Jack Dorsey saying "True" in response to his argument that Bitcoin is good for renewable energy: https://twitter.com/elonmusk/status/1385107878055317509 )
>Life, which you so nobly serve, comes from destruction, disorder and chaos. Take this empty glass. Here it is, peaceful, serene and boring. But if it is [Pushes glass off table] destroyed… [robot cleaners move to clean broken glass] Look at all these little things. So busy now. Notice how each one is useful. What a lovely ballet ensues, so full of form and color. Now, think about all those people that created them. Technicians, engineers, hundreds of people who'll be able to feed their children tonight so those children can grow up big and strong and have little teeny weeny children of their own, and so on and so forth. Thus, adding to the great chain…of life. [Desk prepares a glass of water and a bowl of fruit] You see, Father, by creating a little destruction, I'm actually encouraging life. In reality, you and I are in the same business. Cheers.
Bitcoin should still reduce energy consumption but in the short term it can still have a positive effect on renewable investment.
https://wintonark.medium.com/bitcoin-mining-impact-on-renewa...
Elon Musk showed him self to be either ignorant or a liar about the Green nature of Bitcoin.
Here's a repudiation of the idea that Bitcoin is Green:
https://www.ft.com/content/0448b44d-1d78-48f8-8ca8-6edae7976...
Tesla Inc. buys some Bitcoin.
Tesla announces that Bitcoin is good now and that it bought some.
The price of Bitcoin goes up, because institutional adoption of Bitcoin is good for its price, but also because, by the Elon Markets Hypothesis, anything that Musk buys goes up.
Tesla sells some Bitcoin, making a profit.
Musk tweets that the price of Bitcoin is too high. Bitcoin prices go down due to the Elon Markets Hypothesis.
Go to Step 1.
https://www.bloomberg.com/opinion/articles/2021-02-22/electr...
In crypto: nope.
- big corp buys btc, makes btc legit, raises confidence and price
- new cryptomillionaire find new friend in musk, and consider tesla the car brand of crypto, spend their money on tesla, including bitcoin, so tesla bitcoin wallet grows, while the company value grows while the asset grows..
it's all shower thought but I found it a fun business trick
Tesla buys into some unknown proof-of-stake coin.
I wonder if a serious discussion will finally begin on moving Bitcoin to PoS. This will certainly have a strong opposition and will likely lead to a fork, i.e. two cryptocurrencies will exist at the same time, call them BTC-PoW and BTC-PoS.
In any case these news are a leap forward in the crypto space. IMO, replacing PoW by PoS is a bit like replacing incandescent light bulbs with LEDs at home.
Or, to quote Homer Simpson: https://www.youtube.com/watch?v=N8Yt4p_gJmY
This does not need to apply always. Does money have the value equal to production cost?
Coins like Ethereum that have already proven that immutability isn't a core principle (DAO fork) are fine moving to PoS.
Most coins don't need their own PoW though. It's likely that we'll end up with one PoW chain and everyone else can periodically checkpoint themselves into bitcoin's immutable blockchain.
I mean... I'm not saying Tesla's weird daliance with and then rejection of Bitcoin is particularly rational. I'm just saying it doesn't seem insincere.
The board of Tesla will have agreed the plans.
Bitcoin transactions do not, in and of themselves, consume mining energy. A Bitcoin block is validated by miners who use the same amount of energy, regardless if there are 1 or 1000 transactions in the block. Thus if Tesla cares about "energy per transaction", this metric can go down by actually increasing the number of transactions, ie. by continuing to accept Bitcoin as payments.
It's mind-boggling the number of people who can't wrap their head around this. The easiest way to reduce "energy per transaction" is to increase the number of transactions, whether it's on-chain, off-chain, or L2.
Last I heard, there was a physical limit to the number of transactions in a block (and no intent of increasing that number).
> this metric can go down by actually increasing the number of transactions, ie. continuing to accept Bitcoin as payments.
Are you implying that there are too few transactions to fill blocks right now, so Tesla accepting bitcoin will make blocks fuller?
You also seem to be fully ignoring that the main energy spend is in the mining, not the validation. More transactions (with fixed # of tx/10 min) = higher fees = more mining competition = more energy expenditure.
There is no limit when transactions happen in L2 (or off-chain)
«You also seem to be fully ignoring that the main energy spend is in the mining, not the validation»
Mining and validation are one and the same. A block simultaneously mines new coin and validates existing transactions.
A reduction of the value of Bitcoin would be the only thing that would result in less mining, as miners aren't incentivized to burn as much energy when the rewards aren't as valuable.
https://en.wikipedia.org/wiki/Bitcoin_scalability_problem#Ba...
I also wonder if sometime in the next 6-12 months we'll hear that Tesla is looking to accept Dogecoin due to it being more environmentally responsible (I don't know if that is actually the case, but who knows what changes will happen in 6-12 months).
I mean his tweet right before this announcement was a poll asking just that, if Tesla should accept Dogecoin. So yeah. The guy is a clown.
Mainstream adoption, Visa & Goldman Sachs using it as a settlement layer, actual utility, defi, etc...
Yes it does.
It would be same as if you purchased a large amount of gold, and then exchanged the gold for a car, after gold had increased in price.
In the gold situation, you would also pay capital gains, and the US treats crypto the same as property, in this regard.
Basically whenever you leave any financial position that increased in value for something not a financial asset then capitol gains are likely (there are exceptions)
Cynicism aside, I was very curious if Musk can somehow push the crypto coins to be used as a currency. I guess that failed?
AFAIK manufacturing is a relatively low margin business that is sensible to price and supply fluctuations so it needs supply chain contracts for months if not years ahead which means using it as a currency that is not quickly converted to fiat must be like a huge challenge that only a financial machine building genius like Musk can solve.
Is there a data on how many cars were sold through BTC?
It really doesn't have anything to do with transactions(the fees are only a fraction of the profits). The energy impact would be precisely correlated to the fiat price since the miners will be paying for the energy and equipment in fiat.
Transactions or not, the higher the price, the dirtier the proof of work blockchain is.
Just look at the most recent block: https://www.blockchain.com/btc/block/00000000000000000002865...
reward: 6.25BTC fees for transactions: 0.5BTC
total revenue: 6.75BTC, that is ~ $350K at the moment.
Each block is mined every 10min on average, so it is 2.1M per hour. So the total energy consumption is limited to $2.1M per hour or $1.5B per month at this price. It would be $150M if the price was $5k instead and $30B if the price goes to $1M per BTC. When that happens, 1 transaction will amount to the energy consumption of an American family for 1 year or more. At $1M per BTC, $360,000,000,000 worth of energy would be wasted per year on calculating a hash of a block that is functionally exactly the same with the same amount of transaction as the one calculated for $360, $3.6 or $0.03.
I'm sure I'm missing something like investors betting on price increases, infrastructure elasticity etc. but the correlation must be roughly like that.
A transaction of that sorts would certainly trigger various anti-money laundering regulations where I am from (somewhere in the EU).
https://en.wikipedia.org/wiki/Silicon-burning_process
>When a star has completed the silicon-burning phase, no further fusion is possible. The star catastrophically collapses and may explode in what is known as a Type II supernova.
>The central portion of the star is now crushed into either a neutron star or, if the star is massive enough, a black hole. The outer layers of the star are blown off in an explosion known as a Type II supernova that lasts days to months.
What would have happened…
It’s ok to stop things and then start them later.
This reminds me of twitters “permanent suspension” instead of saying “banned” or “blocked” or “removed.”
Seems funny to use suspend that means temporary for things that just naturally end. Not the end of the world, but one more example of unclear, harder to understand speech.
https://www.reddit.com/r/dogecoin/comments/nb1rki/cryptocurr...
From ElegantPoop:
> Well, it would appear by this image we have ourselves a sub 1% of bitcoin per transaction. Winning.
... while Bitcoin secures its network through an energy intensive[2] proof-of-work scheme, Gridcoin uses a more energy efficient proof-of-stake system. ... nearly all of the energy goes to science - https://en.bitcoinwiki.org/wiki/GridCoin ... Gridcoin compensates researchers for contributing computational power towards BOINC research using an energy-efficient Proof-of-Stake process, instead of generating heat and using computational power for a Proof-of-Work algorithm ... nearly all of the energy goes to science - https://gridcoin.us/wiki/ ... do not require huge amounts of energy consumption to be mined. This makes PoS coins such as Gridcoin a more eco-friendly alternative .. - https://coincentral.com/what-is-gridcoin/ Altcoins like SolarCoin and GridCoin are better for the environment - https://medium.com/@johnniec/altcoins-like-solarcoin-and-gri... What if we could mine cryptocurrency using meaningful calculations with additional real-world benefits?- https://medium.com/adventures-in-volunteer-computing/cryptoc... Sustainable, efficient technology - With its unique PoR/PoS hybrid technology, the GRC blockchain uses PoS to secure its blockchain, while the entire computational capacity is devoted to performing computations for scientific research via PoR. This leads to a very efficient, and lean network, whose computational power is used for a noble purpose. - https://coinswitch.co/info/gridcoin/what-is-gridcoin One of the main advantages of Gridcoin is that crunching (“mining”) does useful scientific research - https://gridcoin.us/wiki/advantages-and-features Gridcoin attempts to address and ease the environmental energy impact of cryptocurrency mining through its proof-of-research and proof-of-stake protocols, as compared to the proof of work system used by Bitcoin - https://en.wikipedia.org/wiki/Gridcoin
The project can be found at https://gridcoin.us
p.s. the wallet can run on all major OS, the database will sync before you can finish you lunch and research crunching can be done on almost all devices including raspberrypi, android and old pcs
Now I’ll take bets on what cryptocurrency they’ll settle on next. Will it be algorand? Avalanche? Celo? The choice will be hard.
I think something like this is the real reason for this move. Bitcoin is inefficient when it comes to energy use, so it's a bad choice for small transactions, but for a single, large transaction, the environmental costs aren't that bad compared to making a car.
But that's a great move for crypto as a whole : once the environmental issue is resolved in people's mind, crypto (not necessarily Bitcoins) might attract many more investors, and we will finally have GPUs!
Reminder: in 2017 woocommerce, square, steam, ... Started to add crypto currency as payment method and then removed it again.
Ada can probably benefit a lot from this, since it's proof of stake instead of proof of work and has potential to be used as an actual currency.
IMO, Monero also has good fundamentals and use cases (privacy). It's PoW, but from a technical standpoint, it's much, much better than Bitcoin as both cash and store of value.
hmmm back of envelope math shows potential default if btc falls below 10k. https://greyenlightenment.com/2021/03/16/microstrategys-bad-...
I hope Mr Saylor saved some $ for the inevitable lawsuits. Very reckless on their part.
Thank you, Elon, for saving the environment with just a single tweet.
For many, who once believed in him, their eyes have been opened. More to come, I'm sure. Slowly but surely, humanists are starting to see that Elon isn't on their side...
Any of our sides... not even his own employees, customers, or shareholders.
BTFD
I'm hoping the lines about not selling and looking at other cryptocurrency options are empty statements to save face.