Decoding Musk’s bittersweet relationship with Bitcoin

Summary

  • The total energy consumed by the Bitcoin mining process could reach almost 112 Terawatt-hour in 2021, as per the Cambridge Bitcoin energy consumption index.
  • The adverse effects of Bitcoin mining on the environment have recently fetched a lot of attention.
  • Elon Musk seems to be playing a significant role in leading the changes in the Bitcoin market.

In a recent Twitter spat between Elon Musk, Tesla CEO, and Brett Winton, Director of Research at ARKInvest, Musk said that Bitcoin miners should audit and reveal how much consumed energy is derived from renewables.

How did the Twitter spat begin?

Brett Winton tweeted - “Previously, we demonstrated how bitcoin minting could allow solar plus battery systems to economically scale to provide a larger share of grid energy.”

To Brett’s tweet, Elon Musk replied - “I agree that this *can* be done over time, but recent extreme energy usage growth could not possibly have been done so fast with renewables.”

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But what has sparked this conversation? Why is it imperative to understand how Bitcoin mining leads to environmental hazards? 

The Bitcoin ecosystem is heavily resource-based. The computers that are used for Bitcoin mining run on high-power processors. These processors are highly energy-intensive. Cambridge Bitcoin energy consumption index says that the total energy consumed by the Bitcoin mining process could reach almost 112 Terawatt-hour in 2021.

The biggest fear is that if Bitcoin mining increases, the global temperature would go beyond 2C within less than three decades.

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So, it seems like Bitcoin mining is a poison to a healthy environment. And the increase in the same could be disastrous even before we realise it.

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Are Musk’s statements determining the Bitcoin ecosystem off late?

The year 2021 has been a roller coaster ride for Bitcoin starting from January. When Musk added hashtag bitcoin to his Twitter Biography, the prices rose by around 20% in one day.

Later in February, when Tesla bought USD 1.5 Billion worth of Bitcoin, the prices again surged by 16% in a single day. As Bitcoin miners and investors were relaxing and digging deeper into the industry, Musk brought an unexpected earthquake in the Bitcoin world with just one single tweet.

In early May, he tweeted that Tesla would no longer accept Bitcoin as a mode of transaction because of the adverse effects of Bitcoin mining on the environment. Immediately after this tweet, Bitcoin prices plunged by 17%.

And again, the most recent Twitter spat between Musk and Brett has put the Bitcoin world on a swinging see-saw.

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Musk’s bittersweet relationship with Bitcoin

There are two sides to the coin. On one side, Elon Musk supported cryptocurrency and won the market’s love and investor’s trust by all the positive measures that he took in the past to support the budding Bitcoin market.

On the other side, the investors are now showing dislike and confusion to Elon Musk, thanks to his recent statements.

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A featured investor wrote on Twitter – “All of my friends, myself included, went from die-hard Elon/Tesla/SpaceX/Neuralink fans to hating you from deep within our souls. How you accomplished that in such a short amount of time is one for the history books.”

 

Interestingly, a new meme has emerged on social media- $StopElon. This follows Elon Musk’s recent tweets. The meme empowers the mining and investing community of the Bitcoin world and proposes a counter social media trend to oppose Elon’s statements and the repercussions in the market.

Copyright © 2021 Kalkine Media

So, we have now seen that from the skyrocketing Bitcoin prices to their immediate fall, Musk is playing a significant role in leading the changes in the Bitcoin market. It is interesting to observe how the market react to his tweets.

One thing is clear- Elon Musk holds exponential power in the cryptocurrency world, which has shown bittersweet results.

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