Tesla’s Musk Reaffirms U-Turn on Bitcoin, Boosts Dogecoin

Tesla’s Musk Reaffirms U-Turn on Bitcoin, Boosts Dogecoin

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Key Takeaways

• Elon Musk moves the crypto markets again by talking up Dogecoin
• Tesla CEO renews arguments against Bitcoin in follow-up tweets

The unexpected move by Tesla to suspend Bitcoin payments for its electric cars was reinforced by Elon Musk’s latest comments on Twitter. Bashing Bitcoin and doubling down on his shifted stance about Bitcoin’s detrimental environmental impact, Elon Musk said yesterday he remains an ardent supporter of crypto, but only crypto that does not drive a massive increase in fossil fuels.

“To be clear, I strongly believe in crypto, but it can’t drive a massive increase in fossil fuel use, especially coal,” Mr. Musk said on Twitter. The tweet followed an earlier post where the billionaire engineer criticized Bitcoin for its skyrocketing electricity consumption that harms the environment. Elon Musk also posted an image of a chart from the University of Cambridge which showed Bitcoin’s energy consumption has risen to stratospheric levels this year. “Energy usage trend over past few months is insane,” he said.

Elon Musk’s comments over the past two days roiled the digital asset space, particularly Bitcoin. The world’s biggest cryptocurrency slid over 10% after Mr. Musk announced Tesla stops accepting the coin. The decision raised questions by the crypto community whether the Tesla boss was previously unaware of Bitcoin’s mining requirements and their toll on the environment.

Staying on topic, but rotating to another coin, Elon Musk released another tweet on Thursday, this time in support of Dogecoin. “Working with Doge devs to improve system transaction efficiency. Potentially promising,” the Tesla CEO said. Immediately after the post, the price of Dogecoin jumped and reached 25% higher to currently trading around $0.55, up from $0.38 before the announcement.

The Mogul’s Support for Dogecoin Continues

The self-coronated “Dogefather” has been primarily responsible for Dogecoin’s rise over the past months. In a series of meme-inspired tweets and jokes, Elon Musk has been touting the Shina Inu-themed cryptocurrency. As a result, the coin reached a record on Saturday, climbing to $0.75, or about $100bn, before Elon Musk’s appearance on the Saturday Night Live show where he was expected to boost the price of Dogecoin to $1. He did mention the coin several times, even called it a “hustle” but ultimately, the price of Dogecoin slid from its peak to reach yesterday’s lows.

Bitcoin, on the other hand, is still capped at around $50,000 while crypto investors are now criticizing Tesla’s Musk for withdrawing his endorsement and swearing off accepting the digital asset as payment for the company’s electric cars.

According to some Bitcoin proponents, Tesla’s move to adopt Bitcoin in February was not so much to push the token into the mainstream of corporate use, but rather to help the company turn a profit by pure financial speculation. Tesla disclosed in its latest report it sold a 10% stake of its bitcoin holdings for a profit of $101mn. On that note, Mr. Musk has reiterated the carmaker company will not be selling its Bitcoin holdings.

The pledge not to sell could have reassured some investors about Tesla’s long-term adoption of Bitcoin. In the meantime, however, Tesla stock is pressured and remains in a downturn. So far this year, Tesla shares are down over 21%.