Bitcoin (BTC): Elon Musk plays both sides

Sun 23 May 2021 ▪ 20h48 ▪ 16 min de lecture - par Adrien Stefanini

It was a tragi-comedy that had us all on the edge of our seats: in the second week of May 2021, Elon Musk showed his true colours by suspending the sale of Teslas in bitcoin (BTC). His argument? Bitcoin is powered by coal…

The ‘Dogefather’ controversy

It all began with the initial fallout after Musk’s controversial appearance on U.S. sketch show Saturday Night Live on 8th May 2021. Musk’s mixed messaging and general antics around Dogecoin (DOGE), including referring to it as a “hustle”, spooked the markets and caused a sharp drop in its price. Cheap laughs for the audience; expensive losses for investors. As if that were not enough, a couple of days after the show aired, and seemingly out of nowhere, Musk suddenly announced via Twitter that Tesla would be suspending the sale of its electric vehicles in bitcoin (BTC), the world’s biggest cryptocurrency. At least three contextual factors make this announcement particularly impactful. The first is Musk’s love affair with Dogecoin since the start of the year, which he has helped to pump to successive all-time highs (ATH). The second factor is that Tesla had only very recently announced that it would accept purchases made in bitcoin, making the abrupt U-turn seem particularly suspicious. Finally, it looks as though Musk was influenced by allegations from inside and outside the crypto community regarding Bitcoin’s negative environmental impact. Below is a screenshot of Musk’s tweet, which reads more like a press release from Tesla’s PR department:

Who is Elon Musk really?

For starters, he is currently the richest man in the world, a title he will fight tooth and nail to hold on to. Each one of his tweets is a weapon of mass persuasion in a game of 4D chess on an international scale. Despite the appearances, he leaves nothing to chance with his communications.

His spontaneous nature often comes across as fake, not because of his Asperger’s syndrome, but because it seems to fulfil a purpose: Musk tries to pass himself off as an avant-garde rebel selling techo-solutionist dreams while preying on the younger generations’ fears about ‘peak oil’ and climate change.

Yet hiding behind the façade of this misleading hope merchant is a transhumanist who is preparing for the introduction of a surveillance-capitalism dystopia, a megalomaniac who would not hesitate to overthrow a government or to make young children mine the cobalt or lithium needed to manufacture Tesla batteries.

“Transnational companies are behind the coup. The United States, too, because of the lithium issue. It is well known that the city of Potosí has industrialised lithium, and with international public bidding, we were awarded service contracts with China and with Europe through Germany… We have pilot projects for this energy, which is the future of the world, and the United States is left out. They do not accept that Indians or social and worker movements can be the agents of our people’s liberation through lithium. At the base, this is our sin, that the United States can be left out of our agreements with transnational companies with China and Europe.”

Former President of Bolivia Evo Morales in an interview with Glenn Greenwald, formerly of the Intercept, 2019

This is simply the way it is: coups d’état are almost always a consequence of the geopolitical calculations of a handful of psychopaths seeking to monopolise the world’s primary materials.

Elsewhere, we see that one of Musk’s transhumanist ventures, Neuralink, has the dismal goal of wiring the human brain up to a machine. Gone are the days where chips were to be inserted into our hands or wrists, the goal is now to implant them directly into the brain. According to Musk, these devices will help “stop the AI apocalypse”, in other words, a future in which artificial intelligence outstrips human intelligence and takes over the planet, to the detriment of the human race. Welcome to the Matrix…

Moving onto SpaceX, we see that it also draws on the same messianic narcissism by suggesting that the Earth is a write-off and that colonising Mars is humanity’s only option. This is the same Mars where the average temperature is -63°C and the atmosphere is 96% carbon dioxide. The bigger the lie…

Another of Musk’s companies, by no means any less intriguing, is Starlink. Its goal is to launch 42,000 satellites into low-Earth orbit as the infrastructure for a worldwide internet connection. Starlink is the standard bearer for a fledgling surveillance capitalism. Every human being, from the hidden depths of the Amazon to the wide-open plains of the African savannah, will henceforth be chained to debt via their phone. This project would also allow the world’s most powerful countries to project their currencies beyond national borders.

This concludes a brief overview of the eccentric billionaire’s principal activities. In short: exercises in corporate greenwashing achieved through the presentation of cornucopian visions of the future.

But what is Tesla’s CEO up to?

Bitcoin is a tool for applying geopolitical pressure that can be used to keep bankers in check. This is a rather oblique way of saying that central bankers around the world did not appreciate Tesla announcing that it would accept Bitcoin as a payment method for its cars.

At the time, Vítor Constâncio, the European Central Bank’s former vice president, fired off a salvo of tweets furiously attacking Tesla’s stock price compared to Apple’s. In one of the tweets, Constâncio wrote the following:

“Tesla shares attained $870 which represents a price/arnings ratio of 1,747 (!) on the basis of last year’s profits. Apple is at 37 and the S&P firms’ average is 23 (against a historical average ≈16). Future profits would have to increase a lot to justify a more normal ratio.”

Good to know: The P/E ratio is calculated by dividing the price per share by annual dividend. A high P/E is therefore a bad portent for the future.

Unfortunately for Tesla’s CEO, his company is still far from rectifying this. While it is true that global sales doubled during the first quarter of 2021 (184,000 sales), sales in China plunged by 27% in April. These figures also fail to take into account that the bulk of Tesla’s profits in the first three months of this year are linked to the resale of carbon credits, to the tune of $518 million (~£366 million). Corporate socialism, anyone?

The repeated attacks on Tesla in U.S. media (against a backdrop of geopolitical tensions between the Middle Empire and Uncle Sam) were so damaging that they led to a proposed Tesla factory in Shanghai to be shelved. This was a heavy blow, especially when the Chinese market is by far the most promising.

Consequently, it is highly likely that the reference to coal in Musk’s tweet is a subliminal message for China. As we all know, between 30% and 40% of the Bitcoin hashrate is provided by China, where the miners use large amounts of coal.

Musk, thanks to a loyal army of ‘Robinhooders’ and other GameStop golden boys that he has dancing to his tune, is attempting to take Bitcoin hostage to put pressure on China, while the latter is itself relying on Bitcoin to weaken the dollar as the world’s reserve currency.

More on that later. For now, let us get to the heart of Musk’s hypocrisy: the eco-friendly card. Here, Tesla’s cars are good because they use electricity, but Bitcoin miners are bad because they use… electricity. Okay, we admit it; it is true. Now, time for some comparisons.

In the first half of 2020, the share of fossil fuels in electricity generation in the U.S. stood at 56% (17% coal and 39% gas). In other words, Teslas run on 56% fossil fuels, and this is excluding the fact that the manufacture of these cars is intensive in terms of resource extraction and the destruction of ecosystems, as well as modern slavery…

Incidentally, German authorities handed Tesla a €12 million fine (~£10.3 million) just last month for having failed to meet its obligations in collecting spent batteries, as they are currently not recyclable.

TWEET READS: Tesla employees in the Congo working to purify cobalt.

But Bitcoin is unethical from an environmental standpoint

When talking about Bitcoin’s energy consumption, we must begin by reminding ourselves that electrical energy cannot be transported over long distances. This is due to the ‘joule effect’, which explains how energy is lost during the transport process, dissipating in the form of heat. (Now you know why birds like to flock together on overhead power lines in the winter.)

Furthermore, so much of the energy generated by hydroelectric dams, which are forced to open their sluice gates during monsoon season, is wasted because of an inability to transport it over long distances. However, this is precisely the energy source that Chinese Bitcoin miners in Szechuan avail themselves of during six months of each year. In the Szechuan province, the hydroelectric capacity is twice as big as the Bitcoin network could absorb during the rainy season.

It is true that these same miners migrate towards Xinjiang during the dry season and that the electricity they use for mining comes from burning coal. But once more, there is no reason to believe in the ‘100% coal’ myth. In fact, 43% of electricity production in that region comes from renewable energy.

In summary, 100% renewables during the monsoon season, and 43% during the dry season. A rough calculation gives us a figure of 73% renewable energy used for mining Bitcoin. This figure is far superior to that boasted by Tesla, at 44%.

Bitcoin miners need to find the cheapest energy possible in order to be profitable. Therefore, they are drawn towards electricity that is not needed by anyone else. Consequently, we might say that Bitcoin is actually a powerful tool for making certain intermittent energy projects profitable.

Proof-of-work

However, the Bitcoin network does produce CO2 emissions, even if they are less than you might be led to believe. Questions around its usefulness are therefore legitimate in a context where net CO2 emissions must be reduced to zero by 2050 to limit global temperature rises of more than 2°C.

So, the following questions must be asked:

  • Is proof-of-work absolutely necessary to ensure a cryptocurrency’s indestructibility? The answer is an emphatic yes.
  • How much energy are we prepared to dedicate to an international monetary infrastructure that replaces the petrodollar and offers every human the chance to liberate themselves from the tyranny of banking regimes that demand infinite economic growth?

The world generates 160,000 TWh of energy per year. Out of this total, 50,000 TWh are wasted. Of this wasted energy, 120 TWh are used to operate Bitcoin. Expressed as a percentage, that is 0.075% of the energy produced in the world and 0.24% of the wasted energy…

For that 0.24% of wasted energy, Bitcoin offers 8 billion people protection against absurd inflation levels orchestrated by a global cabal of parasitic bankers. But wait, there is more…

Bitcoin is humanity’s best insurance against a nuclear winter that will most likely be triggered by a war over monetary hegemony. The U.S. empire and its standard of living are entirely dependent on all the petrol in the world being sold in just a single currency: the American dollar. Every war from the past two or three decades was waged in the name of the petrodollar.

Whether we are talking about Iraq, Libya or Syria, the petrodollar is always lurking in the background. For example, the war in Syria was an indirect attempt to contain Iran, a country that refuses to sell its gas and oil in U.S. dollars.

Americans bombed Syria rather than Iran because it was far easier to break the Syrian link in the chain and prevent the construction of the infamous gas pipeline intended to transport Persian gas up through the Shiite arc and into Europe. Needless to say, this gas would have been sold directly in euros.

Geopolitics is indissociable from the map of energy sources. Wars are always dreamt up in command centres where they decide which currency will be used to fulfil energy provision contracts.

To borrow a phrase from the Barack Obama era, Tehran has long since pivoted to Asia, where Beijing would be more than willing to pay for a portion of its gas in yuan and benefit from the same exorbitant privileges as Washington. The showdown between the two superpowers must necessarily take place in Pakistan, where it is not surprising to see the United States offer their support to India-sponsored separatists in the Pakistani province of Baluchistan.

These are the early signs of another conflict on the horizon that Washington will use to drive a wedge between China and the vast Irani energy reserves, the veritable backbone of the ‘new silk route’.

So, who is the ugly duckling now? Bitcoin or the petrodollar?

Let us conclude this sanctimonious green hypocrisy by reminding ourselves that the electric vehicle is far from being a golden bullet. Replacing 1.2 billion combustion vehicles with electric ones falls some way short of being the paradigm shift we need to tackle global warming. It was about time for the masks to fall off and for the ambiguity to end. Musk, the honorary president of greenwashing, is exploiting his power to control Bitcoin. He will now be treated as a traitor.

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Adrien Stefanini

Ingénieur de formation, et spécialisé dans les nouvelles technologies, je me suis toujours intéressé à la blockchain et aux cryptomonnaies. Je suis heureux de faire partie de l'équipe CoinTribune.

DISCLAIMER

The views, thoughts, and opinions expressed in this article belong solely to the author, and should not be taken as investment advice. Do your own research before taking any investment decisions.

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