Musk Kills Bitcoin — OK, Just Chops Off Its Head…

One of my favorite silly scenes is the Monty Python skit set during the Black Death plague where bodies are piled up on carts and some duuude carries out his old man who insists “Im NOT dead yet”.

That old man is Bitcoin after Elon Musk took a club or sword or a promise of using BTC for transactions, to Bitcoins head.

“Im NOT dead yet!!!”

What did Musk do？

Before we go into what Musk did to Bitcoin, read up on what Musk did with Bitcoin just a few months ago:

Big Short Big Shot Shoots Bitcoin BetMichael Burry takes aim at Teslas Bitcoin bet…

To quote the relevant part of that article here:

At the end of 2020, Tesla had $19.384 billion in cash and cash equivalents. A little less than 10% of that has now gone into Bitcoin. In a recent 10K filing with the SEC, Tesla stated:

“… we expect to begin accepting bitcoin as a form of payment for our products in the near future, subject to applicable laws and initially on a limited basis, which we may or may not liquidate upon receipt.…”

I put Teslas bet on Bitcoin into some corporate context here:

Is Bitcoin Going Mainstream？Tesla just bought $1.5B in Bitcoin — whats next for BTC…

The news of Tesla buying Bitcoins shot the cryptocurrency from a price in the mid-30Ks in early February to mid-60K by April.

Yesterday, Musk tweeted the following:

Musk followed up with a chart showing the recent energy usage trends of Bitcoin:

The market reacted as if Musk had chopped the head off of Bitcoin, and they were left holding the flopping flapping headless carcass of a chicken. No fears, thats just Bitcoin. As it really is.

What‘s this about Bitcoin’s energy usage？

The core issue, and supposedly a key feature, of Bitcoin, is the security ensured by the wicked hard mathematical puzzles required to add to the ledger of Bitcoin transactions.

You may have noted that when you ask your computer to do a particularly difficult task, the fan may pop on and you hear a whooshing sound coming from under or behind your laptop or desktop computer. Computing activity can take considerable energy. Bitcoin transactions take a huge amount of energy because the computational tasks required are very difficult, and designed to get even more difficult with time until the last Bitcoin is mined.

Many thanks to Adelia Ritchie who commented about Bitcoins outrageous energy usage in one of my earlier Bitcoin posts here:

Is Bitcoin Going Mainstream？Tesla just bought $1.5B in Bitcoin — whats next for BTC…

“…blockchain technology consumes unimaginable masses of power, more than some entire countries. Thats the weak link that will eventually kill cryptocurrencies, IMHO…”

Now what will Musk do？

If you‘ve been watching Elon Musk for any period of time, you’ll note that his actions seem unpredictable, almost fickle. I would argue that Musk is unnaturally goal-oriented, and that personal consistency is not something he values highly.

One of Musk‘s primary goals is to accelerate the transition from hydrocarbons towards renewable energy. Tesla is a key component of that acceleration in Musk’s mind. And I believe anything that ensures the company‘s success, including buying Bitcoin only to abandon it a few months later, is fair game to Musk. Bitcoin does not rank higher in Musk’s mind than Tesla or renewable energy. Bitcoin can be sacrificed with impunity.

If Bitcoin can offer profits in the meantime, Musk will take advantage of it. But Musk will not be married to the concept of cryptocurrencies any more than it can be useful in the short term.

One of the inevitabilities is the development of central bank digital currencies (BCDC) which I wrote about here:

Where‘s My Bitcoin？ The Rise of CBDCs…The world’s biggest economies develop central bank digital currencies (CBDCs)…

These will drive private cryptocurrencies like Bitcoin, Ethereum and the others to extinction. When CBDCs begin to roll out as the Chinese are doing now, Tesla will most likely bail out of Bitcoin. Tesla has no dog in the Bitcoin fight, and will not stand by an imaginary friend. Tesla will march off into the sunrise of the future and never look back as the ghost of Bitcoin fades away.