A large number of people were making comments about the environmental concerns of crypto the instant Tesla announced they were buying into Bitcoin. What changed?
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 )
they bought in Q4, sold 1/4 of it in Q1, which allowed them to have a profit that quarter since they lose money on selling cars. Now china car sales are down this quarter and they realize they need to cash out completely.
Is there anything actually binding and backing this statement? I’d love to know if there’s anything at all in regards to how public companies have to treat crypto currency ownership.
It's the same as any asset or revenue stream. They have to report their overall GAAP bottom line only at the end of a quarter but even then don't need to legally report the specifics.
Usually it's reported for shareholder interest and to attract investors. They can also hide it among other business divisions if they want to, risking investor backlash. Like how Microsoft used to show Azure revenue.
Jack Dorsey saying that 'bitcoin incentivizes renewables' is the modern monetary theory of green energy. Gonna leave the fridge door open, the air conditioning on and drive my EV with the breaks engaged to accelerate the green revolution
If the problem supposedly being addressed is surplus renewable supply, a far better and more broadly relevant use would be heating domestic hot water, which would simultaneously displace natural gas usage for that purpose.
About 15% of US household natural gas usage is for domestic hot water heating. That adds up to a lot of CO2.
I've always thought municipal hot water systems are a good idea. Maybe warming water in buffer tanks to supply to homes for hot water and heating writ large a few hours or days later is a feasible buffer?
Municipal hot water systems would suffer from significant heat losses in the piping between the heating plant and the houses, not to mention the huge infrastructure expense of running an extra set of hot water lines throughout a municipality.
What I was describing is more along the lines of dispatchable electric heat pump water heaters in houses. These type of water heaters are already available today, and we should be replacing every natural gas water heater with them.
I would totally be a huge infrastrucre cost. That said many water systems are due for overhauls in the coming years anyways.
However, heat loss is not a significant issue. These systems were installed in Scandinavian countries as well as in a lot of the Soviet Union, with heat losses of 9% and less achievable. This compares favorably with ~5% power losses in the grid. Water stores heat very very well.
The main advantage is that while yes it is a bit less efficient for waste electricity, it allows nuclear power plants, data centers, and other waste heat-producing industries to recuperate 80+% of heat losses, and crucially when heating is a big cost, thermal solar is about 3x more effective than photovoltaic.
This system would make it possible for 100% of heating carbon emissions to be eliminated, all the time, while at the same times allowing for buffer tanks to soak up excess electricity supply.
That's a really large fraction of money going to the mining hardware, despite the model already using high electricity prices. That makes me worry the economics wouldn't be stable enough.
Reminds me of Jean-Baptiste Emanuel Zorg's speech in the fifth element.
>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.
Buying and breaking solar panels still produces a signal for manufacturers to make more solar panels. Buying and breaking the most performant solar panels will produce a signal and selective pressure to create more performant solar panels. It doesnt matter what the demand is for as long as it isnt going away and is selecting for a given outcome.
Bitcoin should still reduce energy consumption but in the short term it can still have a positive effect on renewable investment.
> A large number of people were making comments about the environmental concerns of crypto the instant Tesla announced they were buying into Bitcoin. What changed?
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:
It's a well known fact that Bitcoins are mined through renewable clean energy when over $60K and dirty coal dug by newborn baby labor when under $55K, therefore Musk did the right thing.
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?
I find it shocking that only few people appear to understand why it makes no sense to talk about mining “transitioning to more sustainable energy”. Even here on hn.
What I don't get is, why people are talking about environmental impact per transaction. Transactions or not, the computers are churning constantly to solve the useless function that would produce the hash with the most 0s in it.
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.
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.
People talk about environmental impact per transaction because a transaction is the "useful" part of Bitcoin (even the coins themselves do not really exist, they are actually the unspent outputs of transactions). Yes, since for now the block rewards are still much bigger than the transaction fees, the energy impact of miners is still not very correlated with the number of transactions; but you can still attribute all that cost to the "useful" work it did.
That is: the transactions did not (directly) cause that cost, but they are the "benefits" of incurring that cost. It makes sense to think about how many "benefits" you got from a given amount of costs, or inversely, how much cost there was for each unit of "benefit". To put it another way, if the costs are identical, it's better to have 1000000 transactions than just 100 transactions; "environmental impact per transaction" (or its inverse, "transactions per unit of environmental impact") captures that perfectly.
> To put it another way, if the costs are identical, it's better to have 1000000 transactions than just 100 transactions; "environmental impact per transaction" (or its inverse, "transactions per unit of environmental impact") captures that perfectly.
I don't think it's possible to decouple # of transactions and the price of Bitcoin though. Every additional Bitcoin transaction proves it is a feasible means of exchange, driving the price higher.
There are many other considerations that make a transaction possible. If you remove them, then a transaction wont have much value.
For instance, security of chain's history or censorship resistance are required. These features can fall apart quickly with incentive misalignment. They are tail risks and easy to ignore until it happens
PoW runs just fine on 100% renewable energy. That PoW pollutes at all is because society allows it. Nothing stops the EPA (and similar bodies across the world) from requiring exchanges in their jurisdiction to do taint analysis on newly-mined coins in order to determine whether or not they came from a "certified-green" miner, and if not, apply an extra carbon tax on them (or deny their sale outright).
I posted this article Cryptocurrency Tulipmania: Bitcoin is a shitcoin monday about how Bitcoin is a shitcoin for many reasons, especially because proof-of-work sucks. I'm glad to see it being abandoned by Tesla!
Is it a flip flop or did he just... change his mind? I mean, the guy has a long history of tweet-first-think-later. It seems not unreasonable to me that he got suddenly and violently into cryptocoins, did the same thing people here do every week when they learn about it for the first time, and then (being a billionaire) had trusted folks come to him to carefully explain all the externalities and his generally-strong-if-highly-distractable analytical mind made a different decision with better evidence.
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.
Flip flopping is changing your mind, or your decision once its on record. The fact that we're calling it flip flopping just means that we're thinking of Musk in the same terms we think of a politician.
You mean changing your mind? The similarity to politicians is because he attracts the same attention politicians do. It's not the politician that's the same, it's the polity.
How on earth do you secure that Bitcoin has been mined with sustainable energy?! Makes no sense. Did Elon Musk actually write this and why is it in a jpg image?
This is short enough for a multi tweet tweet which would be the natural thing if it was actually Elon who wrote it.
He doesn’t strike me as the sort of the guy who would put his statement inside an image and I would expect him to understand enough about Bitcoin to know that there is no way to guarantee it being mined “sustainably”.
Time for Crypto to go away for a while as it reinvents itself. In it’s current iteration it’s speculative, the only source from which its derives its value, which is shakey at best, and solves absolutely nothing atm.
It Tesla believes that Bitcoin is environmentally unfriendly, the logical thing to do is to sell all of its coins, as a lower price will lead to a lower level of mining intensity.
This is pretty interesting, either they did a proper research before putting 1.5B$ into it, in which case they would already be aware of the energy consumption, in which case, why announce this now? Or they put that much money without proper research which looks pretty bad for Tesla in my opinion.
Is it possible the bitcoin position was a hedge against chip prices? One would expect the two prices to be correlated. Price of bitcoin goes up -> more miners buy chips. I don't know, their bitcoin position otherwise doesn't make sense to me.
This is optimistic, to say the least. I think ETH2 is a great idea, and is headed in a great direction; but if you take a look at any of the client implementations (Prysm being the most popular), it's not exactly rock-solid software that I would stake $135,000 on. Not to mention that many of the proposed benefits of ETH2 are not in Phase 0. I mean hell, you can't even withdraw your validator's balance yet.
A more skeptical person would say it’s been months away from proof of stake for years now… I’m not bearish on this in particular but let’s wait for the thing to actually happen before celebrating it as a win I reckon.
So multiple people have noted that the environmental concerns were exactly the same and very well known when Tesla originally started taking bitcoin as payment.
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.
That or they are certain they will get burned sooner or later, and therefore even if they tank the value of their holdings it's at a time of their choosing and with an amount that's predictable.
Contrast with the scenario where they keep doing it, steadily increasing their bitcoin holdings and even seeing the proportion of sales using bitcoin increase… and THEN hit a wall, not of their own choosing, and see the value collapse.
Even if they are not dumping their holdings at all, there's still a case to be made for pulling a plug at a time they control, over an amount they control. If it collapses, they can put a hard limit on how much they lose: that being, the previous value of their entire bitcoin holdings.
That is as amendable as the policy of accepting payment in bitcoin was - and right now, with Tesla having a nontrivial position in bitcoin and with Musk being an influencer of bitcoin price, it is in the company's interest for him to say that it is not going to sell, even if it reverses that policy tomorrow.
All it means is that they're effectively "holding bitcoin," or otherwise exposed to its fluctuations. They're doing that anyway. It's not really different from holding forex, stocks or any other risky asset.
What percent of Tesla customers are buying their cars with bitcoins? I doubt it’s more than 1 out of 100, I think it was just a publicity stunt both times, media talked about Tesla when they started accepting them and will talk about them again when they decided to stop it.
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...
It's a figure of speech and meant to be completely neutral and independent of the actual person. Just like "the face of the company", e.g. Pat Gelsinger in the case of Intel or Tim Cook for Apple.
"Face of the company" and "figurehead" have different meanings. The latter is pejorative. From the dictionary: "a person who is head of a group, company, etc., in title but actually has no real authority or responsibility".
If the market going up again (Step 4) is a sure thing, then Step 3 is obviously sub-optimal. If that is not a sure thing, then they've still got a potential ~$1B net loss.
I am not asserting that Elan's and Tesla's motives were pure. Nor that they complied with all applicable laws, regulations, etc. But "classic pump-and-dump" is a poor and very misleading description of the events to date.
I think you are quite obviously correct. But this is Hacker News. Not (hypothetical handwave) Marketer News. On that (\1) site, your comment would be brutally downvoted for obviousness. ;)
Scale and expansion plans only became available on recent S4 filing. That’s new info. Tesla probably doesn’t want to contribute to the trend and hence the change of heart.
I think it's probably indicative of a trend that Tesla doesn't want to incentivize any further. Tesla's mission is all about moving away from fossil fuels.
Prior, lean was towards renewable sources like hydro because of lower cost of surplus energy.
Agreed. And for the cynics: Tesla is gonna lose goodwill and clean energy cred if their brand is tied to stuff like this. It became increasingly clear Bitcoin is overall not in Tesla’s interests.
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.
Doesn't compute. If Euro/USD goes down by few basis points would one stop selling cars priced in euro?
They can always price cars based on BTC's price and liquidate it to fiat or cryptocurrency of their choice.
If Euro/USD goes down by few basis points would one stop selling cars priced in euro?
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
What I'm saying is that they can sell cars in BTC without any volatility exposure. The price going down is not the reason for them deciding against selling cars in BTC but the energy subsidies.
That’s cute. Tesla depends more on credits that they sell than money they “make” on cars. Economically speaking they are not an automaker. They’re reg credit seller and car is just the vehicle (pun intended) to capture rent. I don’t even blame Elon Muks. I blame the gov’t and economists for creating such a stupid ineffective system in the first place.
the biggest notable difference between then and now is then bitcoin seemed to be going only up. Now it seems to be going down
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.
Yes it's being going up overall (a lot), but even if you just look at a chart of the last 12 months, it hasn't dipped more now than it did a few times last year - I can see why some people think it's going to keep going up for a long time, and others the opposite, but I can't see why anyone would think "great it's always going up" until now and be scared by a relatively minor dip down here.
> Musk smartly decided he did not want to risk his half a trillion dollar company on random bitcoin fluctuations.
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.
> Musk smartly decided he did not want to risk his half a trillion dollar company on random bitcoin fluctuations.
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.
Dogecoin is neither deflationary, nor does it have a fixed supply. It's not going to be a thing beyond a lot of poor fools getting rekt when their techno king abandons it for his next meme fetish.
For that very reason, most businesses who accept bitcoin and other crypto (including Tesla, probably) don't actually keep the crypto, they immediately convert to traditional currency.
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.
There is nothing dumb about what Musk and Tesla did, in fact it was for self gain.
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.
Honestly, when is the guy going to get charged by the SEC for market manipulation? It is fairly obvious he knows what he is doing with the crypto market and making a good chunk of change on it through his social media influence. But he also does it with Tesla (I know he got charged that one time but he's been a repeat offender).
Bitcoin is not a security nor a protected commodity market, so does the SEC even have jurisdiction?
McAfee was arrested for pumping crypto, but he was lying about his ownership and gave pretty specific forward looking claims. I don't believe he's been convicted yet.
Bitcoin is regulated in the US under both the Commodities Futures Commission and the Securities Exchange Commission. These tend to be fairly narrow rules about contracts for arbitrage, know your customer rules, etc. I have no idea if they have authority over pump-and-dumps
It's not illegal to buy a stock and tell people you bought it. There are entire businesses whose model is "make an investment, and then tell other people why you made it hoping they will make the same one". This isn't criminal, it's good business practice.
The thing he got in trouble for with Tesla was for lying about about a takeover offer, which is criminal, basically because it's a type of fraud. This isn't that.
It's not dumb, all mayor central banks of the planet have printed 50% of GDP on their currencies including the dollar to deal with the pandemic. That means that you risk losing 50% of the value of your cash, so you invest it and you diversify to protect yourself, but because everybody with money is doing exactly that, you have massive asset bubbles that also risk your money, so its hard to find something to invest in.
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.
Bitcoin and crypto is basically a gamble. But what Musk and Tesla did wasn’t a gamble.
What they did was to effectively monetize Musk’s cult like following and his well earned reputation. They knew with the greatest certainty that the news of Tesla/Musk supporting crypto would lift crypto, so they managed to make money off it.
I am pro Tesla as a company and own a model Y, but this news was upsetting and frustrating to me. Exactly what changed from a few months ago when they announced their Bitcoin position and that they would accept payment? They knew damn well about mining in China being almost exclusively coal and that mining is extremely bad for the environment.
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.
The most reasonable explanation is that Tesla/Elon don't actually care about the environment and if it's going to suffer in their pursuit of whatever financial scheming and/or vanity, so be it.
It says right there that they are holding onto their bitcoin assets. Assuming that's true, there's no way this is a pump and dump, because there was no dump.
It's not really about taxable events so much as possessing a financial interest. Using it as collateral doesn't get it off your balance sheet, nor does it negate the influence of any price swings. If anything, it intensifies them, since a downward swing (say, in response to a tweet saying you're no longer three rocket emoji Bitcoin, only two rocket emoji Bitcoin) might trigger a margin call.
Decision to go into bitcoin was smart and also decision to back off was smart. Musk is the only person who can do or say two contradictory things and both are smart. He really is a genius
You're giving him a bit too much credit. He should have never made Tesla invest money in BTC, that's just a bad PR move. Now they have to do damage control.
> 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.
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.
Well, guarantee after today, pretty much whoever held both bitcoin (and/or possibly other crypto) and Tesla stock, will be selling all of the Tesla stock, at minimum. He made a bunch of enemies today, intentional or not.
I never had TSLA because it never made sense to me why it was so high, but if I did I would definitely have sold it today. Was actually somewhat considering the new Model 3 for my next car, but now I'll look into other EVs instead. Still buying crypto.
This seems so petty, he caused bitcoin and other crypto to go 5x. Maybe some very recent buyers are affected but the vast majority made out like bandits, and can lock in their profits by selling btc off now.
Bitcoin didn't go 5x just because of him. It was already on an upward trajectory, breaking new all-time-highs, and around 30k, if I remember correctly, when he made the announcement that Tesla bought bitcoin and is accepting it.
It did jump up 6% the day he announced Tesla was accepting bitcoin, but he effectively undid all of that (and more, it went down around 12%) yesterday, as well as add more seeming legitimacy to the 'bitcoin is bad for the environment' line that the media has been pushing hard since it started shooting up again (they didn't give a shit when its price was low, even though not much has changed for energy use between then and now).
Some people aren't just looking to make a quick buck, they want to see crypto become a more stable asset class, not just another pump and dump scheme (plenty of shitty alt-coins for pump and dump schemes). This one tweet put a lot more uncertainty into that (it shouldn't have, but it did), especially if it triggers a wave of 'well bitcoin is bad for the environment, so we better get out' from other entities.
Also how would he not know bitcoin's energy usage before the first announcement? If he had done any due diligence at all he would have known this, so either they didn't do any research or it's a bullshit scapegoat to cover up the real reason they're backing out.
In the long run I think Bitcoin will survive this, but in the short term it could prematurely kill (or at least significantly stunt) this current bull run and we could already be back on track for the next multi-year bear market, which I've been through twice now with bitcoin, and it sucks (good for accumulating bitcoin on the cheap though).
Or, did someone higher up leak information to Musk on upcoming regulation?
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.)
This makes no sense, his tweet alone has helped drive BTC down 10%.
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.
> Musk smartly decided he did not want to risk his half a trillion dollar company on random bitcoin fluctuations.
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.
Could Tesla not have just decided that any new purchases would be converted to the dollar immediately? Accepting Bitcoin doesn’t necessarily mean holding Bitcoin and holding is where valuation matters. If I’m right about that it sounds like this could have a somewhat environmentally conscious motive.
Volatility was well known and they could just convert to cash on receipt if that was the problem. More likely he was pressured to stop accepting it for payment. But by who?
Well, the other thing that changed is that the woke mob was throwing a lot of flack at Elon and TSLA about Bitcoin’s environmental impact. As an EV company, they likely want consumer sentiment to view them as having a positive environmental impact.
> Tesla has suspended vehicle purchases using Bitcoin.
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.
> All of this reveals a surprising lack of sophistication in the approach taken by both Tesla and Musk.
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.
> All of this reveals a surprising lack of sophistication in the approach taken by both Tesla and Musk.
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_.
Crypto that is considered securities (by meeting the Howey test) is regulated by the SEC. Crypto that is treated as a commodity is regulated by the CFTC.
There are two main things incentivising me against using it as a form of payment.
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.
Why is #1 a concern? If your BTC appreciated vs USD while you held it, then you'll owe tax on it. If it declined, then you can claim a loss to offset other gains. It's just paperwork. I would imagine that any BTC wallet services worth their salt will be able to spit out an automatic 1099 at the end of the year that can be imported into your tax software.
For #2, I can't see companies offering to pay employees in BTC - it opens them up to too much legal risk.
1) Cause it's effort... as opposed to one single capital gains event when I sell - I would have zillions to colate for all my purchases at different price points. It's not the fact of having to pay tax... it's the effort of tracking what tax I have to pay.
> 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.
Yep. There’s no way I would ever use crypto currency as a day to day currency.
> Makes no sense. Numerous articles document Bitcoin's energy sources, which are often hydroelectric due to its low cost.
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.
> 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.
Bitcoin works remarkably well for shady activities. Ransomware payments, human trafficking, blackmarket dealing, drug smuggling, money laundering, and other illegal activities are worth mentioning.
>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.
> Numerous articles document Bitcoin's energy sources, which are
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.
> Makes no sense. Numerous articles document Bitcoin's energy sources, which are often hydroelectric due to its low cost.
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.
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.
There's also a few potential compounding layers in this.
- 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
Only if it is provable that the intent was to trick other people into buying Bitcoin so you can sell it (pump and dump). For something big like Bitcoin it would be hard to prove. For penny stocks it happens and does get prosecuted.
Welcome to the wild west of Crypto. People have been doing this or similar schemes since 2010. But I don't think that was Elon's intention. He has pretty good point after all. Bitcoin just produced too much unnecessary CO2, so it's simply not gonna work as a money replacement. I think more people start to realize this, but are still a bit reluctant to sell their BTC.
It was absolutely his intention. Everyone who owns bitcoin wants it to go up. This is exactly a pump and dump strategy. He went on SNL to make a broader market aware of it, then in the interest it created, he offloads his shares?
Smartest guy on the planet, claiming to be saving it from climate change didn't know Bitcoin damages the environment?
If he didn't already know that, then can he be trusted? If he did know that, can he be trusted?
Actually yeah who knows. It does make Tesla investment into Bitcoin look completely naive and shortsighted. They surely should have known a few month ago? Did they even start selling cars for coins?
Also probably a good idea to check the real CO2 numbers, they often get extrapolated I think.
Keep in mind that bitcoin is software. It can, and will be upgraded. If Ethereum ends up leading the way with proof of stake and it ends up being a success, then there is no reason to believe that bitcoin wouldn't follow in its footsteps. Crypto is a concept, as much as it is an individual coin game. Bitcoin may not end up being the leader, but your money will definitely change in the future, and it will absolutely be because of crypto currencies.
Exactly. If other currencies prove a better way, and especially if they start taking significant market share, there's nothing stopping bitcoin from following in its footsteps. There's just no point making such a big change when there's plenty of other coins out there to experiment with first.
Sort of. The miner pools have a lot invested in special-purpose hardware. It's not clear what would happen if people tried to make a change miners weren't interested in. Yes, you can threaten a hard fork, but angry miners could freeze transactions, revealing how not-so-decentralized it really is, destroying confidence in it as a currency.
Primarily because the bitcoin codebase got taken over by some bad actors. However, if ETH takes over in market share, BTC can either improve or become irrelevant. The people controlling bitcoin may be dumb, but they aren't dumb enough to let something else take over without a fight.
I don't know if selling bitcoin is legal, because it's unclear how money value is assigned to that. But as long as both parties agree to transaction all seems OK. And in case one party later feels they have been tricked - well, anonymity helps a lot :)
If TSLA has already dumped their Bitcoin, Elon just pulled off a highly lucrative pump and dump scheme.
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.
> 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!"
Or - and this might sound a little tin foil-hat - this was a strategic move to send the price of Bitcoin down, so they can buy the 10% they sold in Q1 back at lower price.
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...
While a popular opinion, that does sound more tin foil hat to me than the alternative that he updated his knowledge in the last few months and/or had his opinion on Bitcoin changed by communication from others in the organisation.
Tesla is a 568 billion market cap company. The profit it made on Bitcoin doesn't move the needle enough to justify some elaborate scheme to pump and dump. Musk is no stranger to whimsical decisions that, while involving a large amount of money in absolute terms, are not material in the context of the much larger value of his shares in Tesla.
> [...] he updated his knowledge in the last few months and/or had his opinion on Bitcoin changed by communication from others in the organisation.
The former idea is ridiculous - so the "Techno King of Tesla" (his choice of title, not mine) took months to learn that proof-of-work crypto produces a lot of CO²? Please...
As for the latter, I doubt that to be the case with a person who allegedly acts like this: "If you said something wrong or made one mistake or rubbed him the wrong way, he would decide you’re an idiot and there was nothing that could change his mind." [0]
> Tesla is a 568 billion market cap company. The profit it made on Bitcoin doesn't move the needle enough to justify some elaborate scheme to pump and dump.
Excuse me? Tesla's Q1 net income was $438M, $101M of which the company attributed to selling crypto [1], that's a whopping 23% of their net profits. I'd say that's "moving the needle" quite a bit indeed.
YMMV of course, but I'd like to think that close to a quarter of net income is quite substantial.
> You're excused. It's clear that assessing public company valuations is not your area.
Basic business economics doesn't seem to be your area.
Here's a basic example of how you can shoot the "public valuation" of a company into Low Earth Orbit without actually earning a single penny for your operations:
Issue 100 million shares at 0.01 cents per share and go public. That's now a $10k dollar public company. Next, you do an increase in capital stock by selling 1 million additional shares at 0.5 dollars per share to gullible investors.
In order to achieve that, you hire a bunch of credible consultants who support your fundraiser by lending your company their good reputation and who advertise your business. You can pay them from the $500k you got from selling the new 1M shares and you can now call yourself a multi-millionaire, because the initial 100 million shares are now worth $50M on paper, because that's the latest share price.
See how that works and why public valuation based on share value isn't always the most useful tool in assessing a company's finances?
> Current earnings matter little to the valuation of high growth companies.
See above for how a company can still be cash-starved from cost of operations and investments despite being worth billions on paper.
Current earnings do matter, because the current share price doesn't pay wages or keeps the lights on in your Gigafactories.
edit: I also find it quite amusing that you think the self-proclaimed "King of Doge" and co-founder of PayPal(!) doesn't know how crypto works, oh please.
This is getting to be a mindless discussion so this'll be my last response on it
>> Issue 100 million shares at 0.01 cents per share and go public. That's now a $10k dollar public company. Next, you do an increase in capital stock by selling 1 million additional shares at 0.5 dollars per share to gullible investors. See how that works and why public valuation based on share value isn't always the most useful tool in assessing a company's finances
Tesla's free float is worth over $453 billion and over $20 billion worth of stock trades each day. This isn't a penny stock whose illiquid float can be pushed around like that.
Regarding company finances, after its capital raise last year TSLA has a large cash balance. $17.4 billion at the most recent quarter end. A few hundred million from the bitcoin sale doesn't move the needle.
What matters when you're considering whether Musk would do this or not is whether it would be material to him. It wouldn't because most of his wealth is tied to the value of his stock, which in turn is tied to the market value of the company. The bitcoin profits made an impact of maybe a tiny fraction of a percent of the value of the company and his wealth. Not worth 5 minutes of his time over 3 months.
He updated his view to the correct one. Do you really want to be part of a lynch mob that makes it harder for public company CEOs to update their view to the correct one by coming out with tinfoil conspiracies to explain actions that were probably just the result of lack of attention?
From the linked statement: "Tesla will not be selling any Bitcoin"
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.
Remember when he tweeted that the TSLA price was too high just so he could buy back stock at a lower price? Then after getting fined a measly $20 million he said it was "worth it". And to be fair, at least he's honest and open about his market manipulation, unlike other players. Shows us that he's able to get away with it. If this doesn't wake people up about the blatant manipulation that goes on in financial markets, I don't know what will.
As far as pump and dumps go, this would make a very tiny amount of money for a company of Tesla's market cap. In another post someone said they made $270MM from selling bitcoin in Q1. On a market cap of close to $590B. And they can only really do that trick a few times at most.
I have no idea what the true motivation for Tesla accepting bitcoin was. But I would be surprised if a publicly traded company took this much risk for such a relatively small amount
It's so unlikely that they can repeat this. Telsa is supposedly one of the most valuable companies in the world, as measured by market cap. There's no way they're depending on pump and dump schemes to sustain their profitability. If that were the case, they wouldn't have nearly as high of a valuation
> If that were the case, they wouldn't have nearly as high of a valuation
Market cap is just number of stock x unit price. Apart from giving a (very rough) idea of how much it would cost to buy the company, it doesn’t say anything by itself. You can choose to see it as how a company is valuable if you think the market is efficient for that. But that high number could also be an accident of a handful speculative traders, because a variation in price change the whole market cap. Like if I pre mine a 1B of a crypto token and sell someone 1 for 1$ my token will have a market cap of 1B$, but that money is nowhere. The stock market could be more efficient, but there is no guarantee it is at time t for every stock.
Comparing market cap and revenue (let alone profit or free cash flow) is an apples to... potato comparison. Especially for Tesla (at a ~600x P/E ratio)
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.
375 comments
[ 2.8 ms ] story [ 263 ms ] threadIt'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 )
Usually it's reported for shareholder interest and to attract investors. They can also hide it among other business divisions if they want to, risking investor backlash. Like how Microsoft used to show Azure revenue.
https://arstechnica.com/information-technology/2015/12/ballm...
https://www.elonmusk.today/
https://wintonark.medium.com/bitcoin-mining-impact-on-renewa...
https://github.com/ARKInvest/SolarBatteryBitcoin
About 15% of US household natural gas usage is for domestic hot water heating. That adds up to a lot of CO2.
https://www.eia.gov/todayinenergy/detail.php?id=37433
Edit: corrected percentage and added reference.
What I was describing is more along the lines of dispatchable electric heat pump water heaters in houses. These type of water heaters are already available today, and we should be replacing every natural gas water heater with them.
However, heat loss is not a significant issue. These systems were installed in Scandinavian countries as well as in a lot of the Soviet Union, with heat losses of 9% and less achievable. This compares favorably with ~5% power losses in the grid. Water stores heat very very well.
The main advantage is that while yes it is a bit less efficient for waste electricity, it allows nuclear power plants, data centers, and other waste heat-producing industries to recuperate 80+% of heat losses, and crucially when heating is a big cost, thermal solar is about 3x more effective than photovoltaic.
This system would make it possible for 100% of heating carbon emissions to be eliminated, all the time, while at the same times allowing for buffer tanks to soak up excess electricity supply.
>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.
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...
Fucking shill
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.
I think the reason people (media) talk about transactions is that blocks and mining rewards are hard to understand.
That is: the transactions did not (directly) cause that cost, but they are the "benefits" of incurring that cost. It makes sense to think about how many "benefits" you got from a given amount of costs, or inversely, how much cost there was for each unit of "benefit". To put it another way, if the costs are identical, it's better to have 1000000 transactions than just 100 transactions; "environmental impact per transaction" (or its inverse, "transactions per unit of environmental impact") captures that perfectly.
I don't think it's possible to decouple # of transactions and the price of Bitcoin though. Every additional Bitcoin transaction proves it is a feasible means of exchange, driving the price higher.
A transaction of that sorts would certainly trigger various anti-money laundering regulations where I am from (somewhere in the EU).
https://henvic.dev/posts/bitcoin/
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.
He doesn’t strike me as the sort of the guy who would put his statement inside an image and I would expect him to understand enough about Bitcoin to know that there is no way to guarantee it being mined “sustainably”.
The electricity is generated in the most part by fossil fuels, so how are they in any way a green alternative?
This is optimistic, to say the least. I think ETH2 is a great idea, and is headed in a great direction; but if you take a look at any of the client implementations (Prysm being the most popular), it's not exactly rock-solid software that I would stake $135,000 on. Not to mention that many of the proposed benefits of ETH2 are not in Phase 0. I mean hell, you can't even withdraw your validator's balance yet.
He'd sell his Futurama mom for a quick stock pump.
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.
Contrast with the scenario where they keep doing it, steadily increasing their bitcoin holdings and even seeing the proportion of sales using bitcoin increase… and THEN hit a wall, not of their own choosing, and see the value collapse.
Even if they are not dumping their holdings at all, there's still a case to be made for pulling a plug at a time they control, over an amount they control. If it collapses, they can put a hard limit on how much they lose: that being, the previous value of their entire bitcoin holdings.
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...
I am not asserting that Elan's and Tesla's motives were pure. Nor that they complied with all applicable laws, regulations, etc. But "classic pump-and-dump" is a poor and very misleading description of the events to date.
“Private-equity firm revives zombie fossil-fuel power plant to mine bitcoin”
https://arstechnica.com/tech-policy/2021/05/private-equity-f...
If that is the case, what was going on before?
Prior, lean was towards renewable sources like hydro because of lower cost of surplus energy.
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"
Also losing 15% against the DKK which regular people use to shop just a 25 min ride from here.
Currency fluctuations are not uncommon and can be very significant.
You mean just over the last month?
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.
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.
Child: Parent, parent, where does our generational wealth come from?
Parent: Well you see my child, back in 2012, I didn't buy a pizza...
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".
The S&P keeps going up because if it went down the fed would lower interest rates until it started going up again.
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.
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.
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.'
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.
They can get 5-10B in it, then Elon can pump it up more.
McAfee was arrested for pumping crypto, but he was lying about his ownership and gave pretty specific forward looking claims. I don't believe he's been convicted yet.
The thing he got in trouble for with Tesla was for lying about about a takeover offer, which is criminal, basically because it's a type of fraud. This isn't that.
Not a lawyer, not legal advice, etc.
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.
Bitcoin and crypto is basically a gamble. But what Musk and Tesla did wasn’t a gamble.
What they did was to effectively monetize Musk’s cult like following and his well earned reputation. They knew with the greatest certainty that the news of Tesla/Musk supporting crypto would lift crypto, so they managed to make money off it.
New money as a percentage of GDP?
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.
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.
It did jump up 6% the day he announced Tesla was accepting bitcoin, but he effectively undid all of that (and more, it went down around 12%) yesterday, as well as add more seeming legitimacy to the 'bitcoin is bad for the environment' line that the media has been pushing hard since it started shooting up again (they didn't give a shit when its price was low, even though not much has changed for energy use between then and now).
Some people aren't just looking to make a quick buck, they want to see crypto become a more stable asset class, not just another pump and dump scheme (plenty of shitty alt-coins for pump and dump schemes). This one tweet put a lot more uncertainty into that (it shouldn't have, but it did), especially if it triggers a wave of 'well bitcoin is bad for the environment, so we better get out' from other entities.
Also how would he not know bitcoin's energy usage before the first announcement? If he had done any due diligence at all he would have known this, so either they didn't do any research or it's a bullshit scapegoat to cover up the real reason they're backing out.
In the long run I think Bitcoin will survive this, but in the short term it could prematurely kill (or at least significantly stunt) this current bull run and we could already be back on track for the next multi-year bear market, which I've been through twice now with bitcoin, and it sucks (good for accumulating bitcoin on the cheap though).
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.)
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.
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.
From a BTC perspective USD is very volatile!
The company probably made a lot of money with this maneuver.
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.
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.
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_.
https://www.irs.gov/businesses/small-businesses-self-employe...
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.
For #2, I can't see companies offering to pay employees in BTC - it opens them up to too much legal risk.
2) Mebbe - no idea either way.
Yep. There’s no way I would ever use crypto currency as a day to day currency.
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.
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.
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.
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.
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...
- 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
In crypto: nope.
Smartest guy on the planet, claiming to be saving it from climate change didn't know Bitcoin damages the environment?
If he didn't already know that, then can he be trusted? If he did know that, can he be trusted?
Also probably a good idea to check the real CO2 numbers, they often get extrapolated I think.
Sort of. The miner pools have a lot invested in special-purpose hardware. It's not clear what would happen if people tried to make a change miners weren't interested in. Yes, you can threaten a hard fork, but angry miners could freeze transactions, revealing how not-so-decentralized it really is, destroying confidence in it as a currency.
Tesla buys into some unknown proof-of-stake coin.
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...
Tesla is a 568 billion market cap company. The profit it made on Bitcoin doesn't move the needle enough to justify some elaborate scheme to pump and dump. Musk is no stranger to whimsical decisions that, while involving a large amount of money in absolute terms, are not material in the context of the much larger value of his shares in Tesla.
The former idea is ridiculous - so the "Techno King of Tesla" (his choice of title, not mine) took months to learn that proof-of-work crypto produces a lot of CO²? Please...
As for the latter, I doubt that to be the case with a person who allegedly acts like this: "If you said something wrong or made one mistake or rubbed him the wrong way, he would decide you’re an idiot and there was nothing that could change his mind." [0]
> Tesla is a 568 billion market cap company. The profit it made on Bitcoin doesn't move the needle enough to justify some elaborate scheme to pump and dump.
Excuse me? Tesla's Q1 net income was $438M, $101M of which the company attributed to selling crypto [1], that's a whopping 23% of their net profits. I'd say that's "moving the needle" quite a bit indeed.
YMMV of course, but I'd like to think that close to a quarter of net income is quite substantial.
[0] https://www.thesun.co.uk/news/7977370/elon-musk-fired-hundre...
[1] https://www.cnbc.com/2021/04/26/tesla-tsla-earnings-q1-2021-...
You say that like he didn't have two giant companies to run.
He wasn't studying bitcoin all this time.
>>Q1 profits
Company valuation depends on decades of earnings. Current earnings matter little to the valuation of high growth companies.
>>excuse me
You're excused. It's clear that assessing public company valuations is not your area.
Basic business economics doesn't seem to be your area.
Here's a basic example of how you can shoot the "public valuation" of a company into Low Earth Orbit without actually earning a single penny for your operations:
Issue 100 million shares at 0.01 cents per share and go public. That's now a $10k dollar public company. Next, you do an increase in capital stock by selling 1 million additional shares at 0.5 dollars per share to gullible investors.
In order to achieve that, you hire a bunch of credible consultants who support your fundraiser by lending your company their good reputation and who advertise your business. You can pay them from the $500k you got from selling the new 1M shares and you can now call yourself a multi-millionaire, because the initial 100 million shares are now worth $50M on paper, because that's the latest share price.
See how that works and why public valuation based on share value isn't always the most useful tool in assessing a company's finances?
> Current earnings matter little to the valuation of high growth companies.
See above for how a company can still be cash-starved from cost of operations and investments despite being worth billions on paper.
Current earnings do matter, because the current share price doesn't pay wages or keeps the lights on in your Gigafactories.
edit: I also find it quite amusing that you think the self-proclaimed "King of Doge" and co-founder of PayPal(!) doesn't know how crypto works, oh please.
>> Issue 100 million shares at 0.01 cents per share and go public. That's now a $10k dollar public company. Next, you do an increase in capital stock by selling 1 million additional shares at 0.5 dollars per share to gullible investors. See how that works and why public valuation based on share value isn't always the most useful tool in assessing a company's finances
Tesla's free float is worth over $453 billion and over $20 billion worth of stock trades each day. This isn't a penny stock whose illiquid float can be pushed around like that.
Regarding company finances, after its capital raise last year TSLA has a large cash balance. $17.4 billion at the most recent quarter end. A few hundred million from the bitcoin sale doesn't move the needle.
What matters when you're considering whether Musk would do this or not is whether it would be material to him. It wouldn't because most of his wealth is tied to the value of his stock, which in turn is tied to the market value of the company. The bitcoin profits made an impact of maybe a tiny fraction of a percent of the value of the company and his wealth. Not worth 5 minutes of his time over 3 months.
He updated his view to the correct one. Do you really want to be part of a lynch mob that makes it harder for public company CEOs to update their view to the correct one by coming out with tinfoil conspiracies to explain actions that were probably just the result of lack of attention?
Edit: Yes, technically it’s future tense, but I’d be surprised if there were going to declare this without also disclosing any material amount they’ve already disposed of. It would do wonders for any charge of pump and dump.
The statements is about their intentions for the future, it's not about what they did or did not.
I have no idea what the true motivation for Tesla accepting bitcoin was. But I would be surprised if a publicly traded company took this much risk for such a relatively small amount
Market cap is just number of stock x unit price. Apart from giving a (very rough) idea of how much it would cost to buy the company, it doesn’t say anything by itself. You can choose to see it as how a company is valuable if you think the market is efficient for that. But that high number could also be an accident of a handful speculative traders, because a variation in price change the whole market cap. Like if I pre mine a 1B of a crypto token and sell someone 1 for 1$ my token will have a market cap of 1B$, but that money is nowhere. The stock market could be more efficient, but there is no guarantee it is at time t for every stock.
[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.