3 reasons why Bitcoin doesn’t care about Elon Musk
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Elon Musk’s Twitter exploits are well-known, but his latest attempt at Twitter-fame was thwarted by his own Muskateers, who patiently explained that Bitcoin doesn’t care about you. Musk’s musing was prompted by a story on Musk’s other obsession, the Boring Company, which recently sold $5 hats. In response, Musk announced that if the Boring Company sold more than 50,000 hats, he would buy back the entire stock and give every owner a free hat, no strings attached, as an apology for delays in delivering pre-ordered hats. (The guy’s a genius—no, really, he’s a certified genius .) When this didn’t happen (Boring did sell 50,000 hats, but
Like it or not, it appears we live in a world where Elon Musk is a giant in the news and a big factor in the stock market. But, if you’re a die-hard cryptocurrency advocate, you’re probably not worried about what Musk is doing with Tesla. In fact, the latest news about Musk’s behavior could have even helped the crypto market.
Bitcoin (BTC) fell 17% as Tesla CEO Elon Musk criticized its use of energy – but it’s already climbing back up.
On the 13th. May BTC/USD is trading above $51,000 after falling to $45.60, regaining more than half of lost positions.
As the drama continues to unfold, Cointelegraph explores why, on a fundamental level, bitcoin is ultimately resistant to the actions of a single user – regardless of their influence.
Unassigned work record
Bitcoin’s PoW (Proof-of-Work) algorithm rewards both miners and investors over time, as their years of work strengthen the network.
The longer bitcoin exists, the less likely it is to succumb to an attack or its members to leave the network for another cryptocurrency.
This is why bitcoin remains a competitive crypto currency – as many claim, no altcoin can do bitcoin like bitcoin.
In Musk’s case, however, the track record is important for another reason. The fact that a leading investor has changed his mind about the merits of bitcoin and the price has fallen does not give miners any additional reason to leave the network or cash in.
This aspect of the network effect means that Musk ends up giving bitcoin more good publicity than bad – as even the price shows, his words and actions don’t change what bitcoin is or what it can do.
Why is proof of work essential for bitcoin? Since a trusted hash (PoW) is the way P2P nodes know that a block is valid without the need for a server or trusted third party, PlanB, the creator of the Bitcoin family of pricing models, has commented on this phenomenon.
Bitcoin is dead without PoW!Graph of bitcoin’s 7-day average hash rate over 1 year. Source: Blockchain
Price trends are not a concern
Despite the sharp drop that followed Musk’s comments, bitcoin’s recent price movement is more a testament to its resilience to criticism than to its vulnerability.
As a result, BTC/USD remained in a downtrend for only two hours before reversing and holding. And not only that: The decline is in line with normal price behavior this year and does not even break a long-term price trend.
One particularly important level that marked the bull run of 2020-2021 was the 21-week exponential moving average (EMA). According to analysts, this level would dictate a price floor during price declines – it even held up during the last bull run peak in 2017.
Musk again failed to reverse the indicator and the short wick to $45,650 faded as he hit the 21-day TEMA on his way down.
1-week candlestick chart of BTC/USD (Bitstamp) with 21-week exponential moving average. Source: View of the shop
Energy consumption of bitcoins is not a problem
As always with bitcoin, it’s worth taking a closer look.
When the dust settles after Musk’s criticism of individual energy projects, the broader debate over bitcoin’s green credentials will continue in its wake. However, most of the common accusations have long since been exposed as short-sighted and without evidence.
Last week, Michael Saylor, CEO of leading bitcoin wallet company MicroStrategy, gave a public interview in which he confirmed that the claim that bitcoin is bad for the environment is not true.
Asked about Musk, he called Tesla’s decision to stop accepting bitcoin payments ironic.
The irony is that no extra energy is used in bitcoin transactions, he wrote on Twitter.
Energy is consumed to secure the network of crypto assets, and the net impact on fossil fuel consumption will be negative over time, all things considered.
Therefore, a broadening of the time horizon is needed to understand why bitcoin makes sense. As Syfedean Ammus, author of the popular book The Bitcoin Standard, often mentions, a weak time preference makes BTC investors realize that abandoning a reliable currency for reasons like environmental protection leads to spending more energy on untrustworthy alternatives.
This time Ammus did not hide his words.
If you haven’t switched rocket and battery production to more sustainable energy either, you look like a big ignorant hypocrite, he wrote on Twitter, referring to SpaceX, Musk’s other company.
The world needs smart money far more than it needs government-subsidized rockets and electric cars.
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