Bitcoin Price Dips On Elon Musk Tweet


At approximately 6:00 p.m. EST last night, May 12, CEO of Tesla Elon Musk posted a tweet in regards to Bitcoin and Tesla that appeared to have significant market impact.

A tweet from Tesla CEO Elon Musk, making inaccurate claims about Bitcoin’s energy use, likely caused a dip in the bitcoin price.

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The tweet included a statement that was misguided in its assessment of Bitcoin’s energy use. While Musk claimed that Tesla is “concerned about rapidly increasing use of fossil fuels for Bitcoin mining and transactions,” the mining industry appears to be growing in its use of renewable energy sources instead. He also seemed to suggest that bitcoin transactions consume energy, but that is not true.

Bitcoin Energy Use Is Not Alarming

It is important to remember what is actually unfolding here with the adoption of the Bitcoin network. With bitcoin, all energy production and consumption now has a distinct economic cost. The problem that bitcoin is solving is the separation of money and state. The reintroduction of free market money will eliminate vast amounts of energy waste, malinvestment and destruction inherent in the incumbent petrodollar system.

Proof of work is crucial to bitcoin, or more broadly, a decentralized monetary network (which only Bitcoin can claim to be). Only the proof-of-work function in the form of the SHA-256 hashing algorithm can ensure that the most recent block was mined fairly, and not by nefarious actors looking to compromise the validity of the chain/network. This is (one of many) killer features of Bitcoin. If you wish to “attack” the network, you need to expend vast amounts of energy and computational resources to do so, and the economic incentives therefore align with simply supporting the network.





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