Elon Musk said Monday that he’s working on two fronts that could be read as bullish in the longer term for dogecoin and bitcoin.
On Monday, the Tesla chief executive tweeted that he had spoken to bitcoin
miners, and that the community has committed to publishing data on their renewable-energy usage.
“Tesla has suspended vehicle purchases using bitcoin,” Musk posted on Twitter on May 12. “We are concerned about rapidly increasing use of fossil fuels for bitcoin mining and transactions, especially coal, which has the worst emissions of any fuel.”
“Cryptocurrency is a good idea on many levels and we believe it has a promising future, but this cannot come at great cost to the environment,” he continued.
On Monday, MicroStrategy
CEO Michael Saylor, a major crypto bull, said that he moderated a Sunday discussion between leading bitcoin miners in North America and Musk — which resulted in Musk’s Monday tweet — and helped to spark the formation of the Bitcoin Mining Council, to “promote energy usage transparency and accelerate sustainability initiatives worldwide.”
Saylor tweeted that executives from bitcoin miners Marathon Digital Holdings,
and Galaxy Digital Holdings
were among those who spoke with Musk.
Musk’s tweets in mid-May were one of the reasons that the crypto market has been unsettled of late, market participants have argued; bitcoin has lost more than $360 billion in value since then, for example.
Musk later said that Tesla isn’t selling the company’s bitcoin cache and vowed to accept the cryptocurrency for payment “as soon as mining transitions to more sustainable energy.” Tesla held some $2.5 billion worth of bitcoin as of the end of March, according to public filings.
At last check, bitcoin was changing hands at $39,057.55 on CoinDesk, up over 15% over the past 24 hours. The world’s No. 1 crypto had lurched below $32,000 on Sunday before staging a remarkable rebound on Monday.
Meanwhile, dogecoin, the meme asset that was created in 2013 and has minted millionaires due to its stratospheric rise in 2021, was up more than 21% on Monday, changing hands at 36 cents.
It isn’t clear what Musk intends to do to improve upon dogecoin, which is viewed as a protocol that is more environmentally friendly than bitcoin. However, some have suggested that the asset’s protocol could be changed to a proof-of-stake from a proof-of-work, which would make it far less energy-intensive.
Under the proof-of-stake protocol, miners are randomly selected to confirm a transaction, but to do so they must commit a certain number of cryptocurrency to the blockchain. By predetermining the miners, the race to solve the complicated puzzles, which proof-of-work uses, reduces high electricity and hardware costs and discourages illicit behavior such as double-spending and controlling the network, crypto experts have argued.
Musk’s tweet about dogecoin on Monday came after he claimed via Twitter on May 13 that he was “working with Doge [developers] to improve system transaction efficiency,” “Potentially promising,” he added.
Dogecoin has taken a beating since hitting a peak at 74.07 cents earlier in May, but is still up more than 7,400% year to date. Meanwhile, bitcoin is well of its mid-April peak near $65,000, but is still up 36% so far this year.
By comparison, traditional assets have seen more pedestrian returns. The Dow Jones Industrial Average
is up 12.4% year to date, the S&P 500 index
has gained nearly 12% over the same period, the Nasdaq Composite Index
is up 6% thus far in 2021, while gold futures
are down less than 1%.