Bitcoin has been crashing as of late, and for many people, the main reason has to do with Elon Musk. Last month, the South African entrepreneur announced that he was rescinding a decision that his electric car company Tesla was going to accept bitcoin-based payments for goods and services.
It’s Hard to Know What Elon Musk Was Thinking
This was a hard blow for many traders given that this would have sent bitcoin spinning into a wild price frenzy. In addition, it would have likely taken it closer to mainstream territory given that bitcoin was closer to its initial goal of being utilized as a payment currency.
This is what bitcoin was built for when it first emerged in 2009. While the currency has been a great speculative tool in the past and has even been deemed a solid hedge for one’s portfolio since the coronavirus pandemic took hold, bitcoin was always designed to push fiat and credit cards to the side.
Sadly, it has never fully enjoyed this position given it is one of the most volatile assets in the history of trading and investing. We have seen a solid example of this only recently when the currency rose to its new all-time high of approximately $64,000 per unit only to fall to about $29,500 just a few days ago. In about two months, the world’s number one digital currency lost more than half its value.
The reason Elon Musk decided to end Tesla bitcoin payments was because he had concerns about the mining process. He claimed that there were too many environmental hazards at stake, and miners were utilizing too much of the world’s electricity, which could leave behind a heavy carbon footprint.
While he has since said he is willing to consider BTC payments in the future should emissions go down and clean energy be put to greater use, there is still a major question that needs to be asked… What the heck was Elon Musk thinking?
Okay, maybe there was legitimate concern in the entrepreneur’s mind about how the bitcoin mining space could hurt the planet, but seriously… His company purchases $1.5 billion worth of the asset and then it almost feels like he was on some sort of mission to ensure that the investment went sour.
He Stands to Lose a Lot
No doubt that everyone lost something due to the recent volatility, and this includes Musk. Other than MicroStrategy, Tesla purchased more BTC than any other institution, so naturally, there was a lot of money to be lost through these little word games Musk appears to have been playing.
Thus far, the company is sitting on a major loss of nearly $100 million, and that is if bitcoin manages to recover, and considering Musk claims he has only sold about ten percent of the firm’s stash, he has likely lost quite a bit more in comparison to average traders.