Tesla has suspended vehicle purchases using Bitcoin
twitter.com
twitter.com
So what changed? Well I think the biggest notable difference between then and now is then bitcoin seemed to be going only up. Now it seems to be going down. When bitcoin continues to steadily go down, it is a significant concern because Tesla will have to take losses on the cars it sells and will have reduced gross margins, which will result in their stock price tanking.
Musk smartly decided he did not want to risk his half a trillion dollar company on random bitcoin fluctuations. It is probably the right decision (although certainly covered up with false reasoning) but he should have never reached this stage. Tesla should have never taken bitcoin without provisions for automatically converting it into one of the currencies it pays its costs in.
Contrast with the scenario where they keep doing it, steadily increasing their bitcoin holdings and even seeing the proportion of sales using bitcoin increase… and THEN hit a wall, not of their own choosing, and see the value collapse.
Even if they are not dumping their holdings at all, there's still a case to be made for pulling a plug at a time they control, over an amount they control. If it collapses, they can put a hard limit on how much they lose: that being, the previous value of their entire bitcoin holdings.
Step 1: purchase $1.5Bn in Bitcoin
Step 2: make an announcement that will likely result in a rising valuation (it briefly went up by ~20% just because Musk added #bitcoin to his bio on Twitter...)
Step 3: sell 10% of your bitcoin at a profit of >$272M in Q1
Step 4: wait for the market to go up again, then proceed with Step 3
It's less risky to invest in a highly volatile, unregulated market if you have the means to somewhat steer the market just by making an announcement or have your company's figurehead add a hashtag on Twitter...
>Face of the company" and "figurehead" have different meanings. The latter is pejorative..
I am not asserting that Elan's and Tesla's motives were pure. Nor that they complied with all applicable laws, regulations, etc. But "classic pump-and-dump" is a poor and very misleading description of the events to date.
“Private-equity firm revives zombie fossil-fuel power plant to mine bitcoin”
https://arstechnica.com/tech-policy/2021/05/private-equity-f...
If that is the case, what was going on before?
Prior, lean was towards renewable sources like hydro because of lower cost of surplus energy.
Now it seems to be going down. When bitcoin continues to steadily go down, it is a significant concern because Tesla will have to take losses on the cars it sells and will have reduced gross margins, which will result in their stock price tanking.
They can always price cars based on BTC's price and liquidate it to fiat or cryptocurrency of their choice.
Btc swings can be +/-20% a day, so not exactly a great comparison.
Also currency hedging is a thing that many companies employ to normalize profits. I’m sure there’s a BTC equivalent for this but the volatility would make it unreliable most likely
That's not "a few basis points"
Also losing 15% against the DKK which regular people use to shop just a 25 min ride from here.
Currency fluctuations are not uncommon and can be very significant.
Currency is a representation of the market it represents. Not from memes of billionaires.
Is that so hard to understand?
You mean just over the last month?
Thats not a notable difference - it goes up and down all the time. Its renowned for its volatility. You can hardly say 'bitcoin seemed to be going only up' with a straight face - its been a rollercoaster since day 1.
I seem to remember that back then it was more "When you're down so low, the only way is up".
I should have grabbed a few score of those BTC for pocket change, but did not bother. Yeah, I know.
Child: Parent, parent, where does our generational wealth come from?
Parent: Well you see my child, back in 2012, I didn't buy a pizza...
It's had a few sharp downs. It's had a few long plateaus of a year or so.
But - from the perspective of yesterday going back a few months - it certainly seemed to only go up.
If the S&P was up over 59,000,000x in 12 years, people would say the S&P only goes up... I mean, they already say "stonks only go up".
The S&P keeps going up because if it went down the fed would lower interest rates until it started going up again.
so musk realized finally that bitcoin is volatile. he's an idiot. his stupid appearance on snl confirms this perspective for me. why are so many people listening to this dimwit. he has nothing of value to offer or say. he should keep his stupid mouth shut. he's worse than trump in that regard.
It's not going to matter. If Bitcoin is going down persistently it means we're on the back side of this global asset mania (which the commodity bubble may be signaling, that we're in or close to the 9th inning), and Tesla's stock is going with it under all scenarios. $900 to $589 is already telling an obvious story.
Granted it's not just Tesla's bubble that is well over, the cloud bubble has ended as well (just wait until you see how low eg Snowflake goes, top to bottom).
Amusingly, Bitcoin is likely to hold its value better than Tesla, in the case of the asset bubbles giving out. The market will look to value Tesla a bit closer to fundamentals (already happening), which is another 70-90% down for Tesla. At some point Tesla will be valued based on cashflow, profit production, and they'll never be able to support a $500b valuation; whereas Bitcoin can support something like a trillion dollar valuation globally (even if it takes more time to hold that ground persistently).
I can't wait to go value hunting in the cloud again, as in March of 2020. Tesla won't be on that shopping list.
Pretty sure he saw this now deleted thread on Reddit /r/dogecoin
https://www.reddit.com/r/dogecoin/comments/nb1rki/cryptocurr...
From ElegantPoop:
> Well, it would appear by this image we have ourselves a sub 1% of bitcoin per transaction. Winning.
Winning indeed.
"Hey, poppa, why is our currency named doge coin?"
'Well son, a long time ago there was this really cute shiba inu that became a bit of a meme and then the internet happened.'
On the other hand, Tesla is unique in that it literally went out and bought bitcoin to just sit on it, which is incredibly dumb.
Look at the price when Tesla announced they bought bitcoin worth about a billion dollars. Even after the current fall, the price now is way higher than back then.
Just the way Musk has been able to manipulate the whole market after investing his? and Tesla's money is just extraordinary.
It was a strategic investment which has reaped money like anything in such a short span and they even used part of it to generate a positive component to their balance sheet in last quarter.
They can get 5-10B in it, then Elon can pump it up more.
McAfee was arrested for pumping crypto, but he was lying about his ownership and gave pretty specific forward looking claims. I don't believe he's been convicted yet.
The thing he got in trouble for with Tesla was for lying about about a takeover offer, which is criminal, basically because it's a type of fraud. This isn't that.
Not a lawyer, not legal advice, etc.
Elon took a relative small bet by been the first mayor company to buy massive amounts of crypto and so far he has made bank. Only the future will tell if it was a good move in the long run.
Bitcoin and crypto is basically a gamble. But what Musk and Tesla did wasn’t a gamble.
What they did was to effectively monetize Musk’s cult like following and his well earned reputation. They knew with the greatest certainty that the news of Tesla/Musk supporting crypto would lift crypto, so they managed to make money off it.
New money as a percentage of GDP?
On another note, I don't think anybody was able to buy a Tesla with Bitcoin. This was a false claim that never came to fruition. Some serious market manipulation here by Tesla and Elon.
If we were talking penny stocks, this is classic pump and dump behavior that should result in jail time.
I mean how much attention does one person need.
TSLA appears to follow the same curve as BTC ... but either way it doesn't make sense, because if you accept BTC payments, you can instantly transfer them to cash if you don't trust BTC.
It did jump up 6% the day he announced Tesla was accepting bitcoin, but he effectively undid all of that (and more, it went down around 12%) yesterday, as well as add more seeming legitimacy to the 'bitcoin is bad for the environment' line that the media has been pushing hard since it started shooting up again (they didn't give a shit when its price was low, even though not much has changed for energy use between then and now).
Some people aren't just looking to make a quick buck, they want to see crypto become a more stable asset class, not just another pump and dump scheme (plenty of shitty alt-coins for pump and dump schemes). This one tweet put a lot more uncertainty into that (it shouldn't have, but it did), especially if it triggers a wave of 'well bitcoin is bad for the environment, so we better get out' from other entities.
Also how would he not know bitcoin's energy usage before the first announcement? If he had done any due diligence at all he would have known this, so either they didn't do any research or it's a bullshit scapegoat to cover up the real reason they're backing out.
In the long run I think Bitcoin will survive this, but in the short term it could prematurely kill (or at least significantly stunt) this current bull run and we could already be back on track for the next multi-year bear market, which I've been through twice now with bitcoin, and it sucks (good for accumulating bitcoin on the cheap though).
I guess we might know if Musk sells his coins.
(And no--I have no evidence. I just know wealthy boys get information. Even the people who didn't like Musk did 180's after his ingratiating performance Saturday Night Live. For the record, I have always liked Musk.)
The amount of BTC Tesla could take in was likely only to be a small fraction of the amount they already hold. The terms were terrible for buyers, since TSLA forced them to take the downside risk on BTC movements.
Except that's actually what he did, so if it was smart, then he didn't believe he was risking his business on it. Many, many retailers already stopped accepting bitcoin for this exact reason, so either he's not smart, according to your logic, or he had ulterior motives, which must somehow be smarter than the surface appearance of it. It can't be both.
Here's what changed: Your perception of him.
You think he has anyone's interest at stake but his own. He does not. He will throw anyone under the bus for his whims, even the entire planet. He disparages and slanders people rescuing kids from a cave.
> covered up with false reasoning
Um, do you mean a lie? This is all so juvenile. Are you afraid he's going to say, "What are you calling me a liar?"
Yes. You're calling him a liar. He's a liar. That's what he is.
What else is he lying about? He has proven, unequivocally, that he is willing to ruin people for profit.
He's not doing well for human beings and he is actively betraying people who want to help humanity. When the truth can no longer be denied, all of those Tesla buyers are going to have some real egg on their faces. When Tesla goes under and they all stop working. It's just a matter of time.
The amount of catastrophe that has already been created by this man is, as of yet, unimaginable. It is indefensible.
> he should have never reached this stage
We agree on that.
From a BTC perspective USD is very volatile!
The company probably made a lot of money with this maneuver.
1. Buy $1.5 billion in BTC
2. Announce TSLA will accept BTC, with the knowledge that very few people will actually do that, and public support from a major company will drive up the price of BTC.
3. Sell off your BTC at the higher price. A portion was sold in Q1 for a hefty profit already.
4. Rinse and repeat with DOGE?
The environmental impact was well known before they bought it, so it's a little odd that they'd reverse course because of that.
I wonder if the original decision to accept bitcoin was a quick decision by the CEO, but now the rest of the company and the shareholders have persuaded them it isn't a public relations risk they should be taking. Imagine the headline - "Every Tesla EV bought with bitcoin gives off more CO2 than a gas car!"
Crypto is an unregulated market with ridiculously high volatility and announcements or big buy-ins are a relatively safe method of controlling the price (to a degree).
It's a win-win in the eyes of the management - great PR ("see - they DO care") and dropping crypto prices...
Tesla is a 568 billion market cap company. The profit it made on Bitcoin doesn't move the needle enough to justify some elaborate scheme to pump and dump. Musk is no stranger to whimsical decisions that, while involving a large amount of money in absolute terms, are not material in the context of the much larger value of his shares in Tesla.
The former idea is ridiculous - so the "Techno King of Tesla" (his choice of title, not mine) took months to learn that proof-of-work crypto produces a lot of CO²? Please...
As for the latter, I doubt that to be the case with a person who allegedly acts like this: "If you said something wrong or made one mistake or rubbed him the wrong way, he would decide you’re an idiot and there was nothing that could change his mind." [0]
> Tesla is a 568 billion market cap company. The profit it made on Bitcoin doesn't move the needle enough to justify some elaborate scheme to pump and dump.
Excuse me? Tesla's Q1 net income was $438M, $101M of which the company attributed to selling crypto [1], that's a whopping 23% of their net profits. I'd say that's "moving the needle" quite a bit indeed.
YMMV of course, but I'd like to think that close to a quarter of net income is quite substantial.
[0] https://www.thesun.co.uk/news/7977370/elon-musk-fired-hundre...
[1] https://www.cnbc.com/2021/04/26/tesla-tsla-earnings-q1-2021-...
You say that like he didn't have two giant companies to run.
He wasn't studying bitcoin all this time.
>>Q1 profits
Company valuation depends on decades of earnings. Current earnings matter little to the valuation of high growth companies.
>>excuse me
You're excused. It's clear that assessing public company valuations is not your area.
Basic business economics doesn't seem to be your area.
Here's a basic example of how you can shoot the "public valuation" of a company into Low Earth Orbit without actually earning a single penny for your operations:
Issue 100 million shares at 0.01 cents per share and go public. That's now a $10k dollar public company. Next, you do an increase in capital stock by selling 1 million additional shares at 0.5 dollars per share to gullible investors.
In order to achieve that, you hire a bunch of credible consultants who support your fundraiser by lending your company their good reputation and who advertise your business. You can pay them from the $500k you got from selling the new 1M shares and you can now call yourself a multi-millionaire, because the initial 100 million shares are now worth $50M on paper, because that's the latest share price.
See how that works and why public valuation based on share value isn't always the most useful tool in assessing a company's finances?
> Current earnings matter little to the valuation of high growth companies.
See above for how a company can still be cash-starved from cost of operations and investments despite being worth billions on paper.
Current earnings do matter, because the current share price doesn't pay wages or keeps the lights on in your Gigafactories.
edit: I also find it quite amusing that you think the self-proclaimed "King of Doge" and co-founder of PayPal(!) doesn't know how crypto works, oh please.
>> Issue 100 million shares at 0.01 cents per share and go public. That's now a $10k dollar public company. Next, you do an increase in capital stock by selling 1 million additional shares at 0.5 dollars per share to gullible investors. See how that works and why public valuation based on share value isn't always the most useful tool in assessing a company's finances
Tesla's free float is worth over $453 billion and over $20 billion worth of stock trades each day. This isn't a penny stock whose illiquid float can be pushed around like that.
Regarding company finances, after its capital raise last year TSLA has a large cash balance. $17.4 billion at the most recent quarter end. A few hundred million from the bitcoin sale doesn't move the needle.
What matters when you're considering whether Musk would do this or not is whether it would be material to him. It wouldn't because most of his wealth is tied to the value of his stock, which in turn is tied to the market value of the company. The bitcoin profits made an impact of maybe a tiny fraction of a percent of the value of the company and his wealth. Not worth 5 minutes of his time over 3 months.
He updated his view to the correct one. Do you really want to be part of a lynch mob that makes it harder for public company CEOs to update their view to the correct one by coming out with tinfoil conspiracies to explain actions that were probably just the result of lack of attention?
Edit: Yes, technically it’s future tense, but I’d be surprised if there were going to declare this without also disclosing any material amount they’ve already disposed of. It would do wonders for any charge of pump and dump.
The statements is about their intentions for the future, it's not about what they did or did not.
I have no idea what the true motivation for Tesla accepting bitcoin was. But I would be surprised if a publicly traded company took this much risk for such a relatively small amount
Market cap is just number of stock x unit price. Apart from giving a (very rough) idea of how much it would cost to buy the company, it doesn’t say anything by itself. You can choose to see it as how a company is valuable if you think the market is efficient for that. But that high number could also be an accident of a handful speculative traders, because a variation in price change the whole market cap. Like if I pre mine a 1B of a crypto token and sell someone 1 for 1$ my token will have a market cap of 1B$, but that money is nowhere. The stock market could be more efficient, but there is no guarantee it is at time t for every stock.
[1] https://old.reddit.com/r/dataisbeautiful/comments/n0jxyt/tes...
comparing the earnings to their market cap makes no real sense. Comparing to their existing earnings or profitability of their existing investments makes way more sense.
It's really hard to argue Tesla's surprise here. (Elon Musk actually replied to Jack Dorsey saying "True" in response to his argument that Bitcoin is good for renewable energy: https://twitter.com/elonmusk/status/1385107878055317509 )
Usually it's reported for shareholder interest and to attract investors. They can also hide it among other business divisions if they want to, risking investor backlash. Like how Microsoft used to show Azure revenue.
https://arstechnica.com/information-technology/2015/12/ballm...
https://wintonark.medium.com/bitcoin-mining-impact-on-renewa...
About 15% of US household natural gas usage is for domestic hot water heating. That adds up to a lot of CO2.
https://www.eia.gov/todayinenergy/detail.php?id=37433
Edit: corrected percentage and added reference.
What I was describing is more along the lines of dispatchable electric heat pump water heaters in houses. These type of water heaters are already available today, and we should be replacing every natural gas water heater with them.
However, heat loss is not a significant issue. These systems were installed in Scandinavian countries as well as in a lot of the Soviet Union, with heat losses of 9% and less achievable. This compares favorably with ~5% power losses in the grid. Water stores heat very very well.
The main advantage is that while yes it is a bit less efficient for waste electricity, it allows nuclear power plants, data centers, and other waste heat-producing industries to recuperate 80+% of heat losses, and crucially when heating is a big cost, thermal solar is about 3x more effective than photovoltaic.
This system would make it possible for 100% of heating carbon emissions to be eliminated, all the time, while at the same times allowing for buffer tanks to soak up excess electricity supply.
>Life, which you so nobly serve, comes from destruction, disorder and chaos. Take this empty glass. Here it is, peaceful, serene and boring. But if it is [Pushes glass off table] destroyed… [robot cleaners move to clean broken glass] Look at all these little things. So busy now. Notice how each one is useful. What a lovely ballet ensues, so full of form and color. Now, think about all those people that created them. Technicians, engineers, hundreds of people who'll be able to feed their children tonight so those children can grow up big and strong and have little teeny weeny children of their own, and so on and so forth. Thus, adding to the great chain…of life. [Desk prepares a glass of water and a bowl of fruit] You see, Father, by creating a little destruction, I'm actually encouraging life. In reality, you and I are in the same business. Cheers.
Bitcoin should still reduce energy consumption but in the short term it can still have a positive effect on renewable investment.
Elon Musk showed him self to be either ignorant or a liar about the Green nature of Bitcoin.
Here's a repudiation of the idea that Bitcoin is Green:
https://www.ft.com/content/0448b44d-1d78-48f8-8ca8-6edae7976...
Tesla Inc. buys some Bitcoin.
Tesla announces that Bitcoin is good now and that it bought some.
The price of Bitcoin goes up, because institutional adoption of Bitcoin is good for its price, but also because, by the Elon Markets Hypothesis, anything that Musk buys goes up.
Tesla sells some Bitcoin, making a profit.
Musk tweets that the price of Bitcoin is too high. Bitcoin prices go down due to the Elon Markets Hypothesis.
Go to Step 1.
https://www.bloomberg.com/opinion/articles/2021-02-22/electr...
- big corp buys btc, makes btc legit, raises confidence and price
- new cryptomillionaire find new friend in musk, and consider tesla the car brand of crypto, spend their money on tesla, including bitcoin, so tesla bitcoin wallet grows, while the company value grows while the asset grows..
it's all shower thought but I found it a fun business trick
In crypto: nope.
Smartest guy on the planet, claiming to be saving it from climate change didn't know Bitcoin damages the environment?
If he didn't already know that, then can he be trusted? If he did know that, can he be trusted?
Also probably a good idea to check the real CO2 numbers, they often get extrapolated I think.
Sort of. The miner pools have a lot invested in special-purpose hardware. It's not clear what would happen if people tried to make a change miners weren't interested in. Yes, you can threaten a hard fork, but angry miners could freeze transactions, revealing how not-so-decentralized it really is, destroying confidence in it as a currency.
Tesla buys into some unknown proof-of-stake coin.
The real reason is likely to be that few, if any, cars were bought with bitcoin.
This has been a recurring theme throughout Bitcoin's history that's played out hundreds of times in more or less the same way. Merchants discover Bitcoin, and think it is a (VISA|PayPal|Checking|etc.) replacement. Then they try using it that way. They're shocked to find very low to non-existent transaction volume.
When Bitcoin does work, it's in situations in which those making the payment have few other options. They're blocked from taking credit card payments or interacting with the banking system. It's easy to dismiss those use cases, but they're real.
> ... we intend to use it when mining transitions to more sustainable energy.
Makes no sense. Numerous articles document Bitcoin's energy sources, which are often hydroelectric due to its low cost.
The part about other cryptocurrencies using less energy is pie in the sky reference to proof-of-stake. Its security model has yet to be proven on any network worth discussing. Those claiming otherwise are selling snake oil.
All of this reveals a surprising lack of sophistication in the approach taken by both Tesla and Musk.
Tesla's engineering team received experienced in supporting Bitcoin for payments and treasury management. Tesla received quite a bit of PR for accepting Bitcoin. Selling Bitcoin also net Tesla a substantial ($101 million) profit. It is said Tesla does not have a marketing department, but it is marketing itself just fine. You don't give Musk enough credit, he knows what he's doing.
Unless it was a pump and dump scheme. Granted, he says they won't be selling it until later, but they can just say they've decided it'll never be viable later, then sell it. This tracks with your statement that mining transactions using more sustainable energy doesn't make sense.
Since crypto isn't regulated by the SEC, it seems like leveraging Tesla for a pump and dumb to generate capital is _not illegal_.
https://www.irs.gov/businesses/small-businesses-self-employe...
1) Purchases with Bitcoin are a capital gains tax event. Or they might be? I can't be arsed figuring that out. It's hard to blame Bitcoin for this one.
2) There are not enough things that I am conveniently able to purchase with bitcoin for me to go full bitcoin (e.g. accepting salary payments in bitcoin)... This is a network effect thing. Every alternate payment system has to solve this problem.
1 is a massive barrier to solving 2. Regulatory environment needs to be fixed first.
For #2, I can't see companies offering to pay employees in BTC - it opens them up to too much legal risk.
2) Mebbe - no idea either way.
Yep. There’s no way I would ever use crypto currency as a day to day currency.
It's so easy to assert and so comforting to believe, but is it true?
Just in this thread alone there are two articles already, one from the Financial Times, one from ARS Technica, which say the opposite. And personally, it's hard for me to believe that people who are keen on maximizing profits in pretty much its purest form--cryptocurrencies are literally burning resources for money, directly--would not take the opportunity to take whatever energy source is available in order to convert the generated energy into money in their bank account or crypto wallet.
At astronomically low efficiency, too. Because in proof of work, all calculations per block are entirely wasted... until the very last one where you managed to hit the right hash.
Bitcoin works remarkably well for shady activities. Ransomware payments, human trafficking, blackmarket dealing, drug smuggling, money laundering, and other illegal activities are worth mentioning.
Not really. Leaving a permanant transaction history of one's crimes in the hands of multiple 3rd parties potentially for thousands of years doesn't work out too well if anyone is interested in prosecuting said crimes in the future.
Primarily based in a country which is also the world's largest consumer of coal
> Its security model has yet to be proven on any network worth discussing. Those claiming otherwise are selling snake oil.
If there are specific problems worth raising about PoS, please share them, I'm sure plenty of folk here would love to learn what they are.
My take is that it's probably an ESG thing, perhaps some funds voiced their concerns about the potential for Tesla stock to hurt their ESG ratings. There was never any question of whether holding and transacting in Bitcoin would eventually start appearing on the same page as Greta Thunberg, the only question was when. It seems Musk just drastically accelerated this outcome.
It doesn't matter if the rest of the country isn't also on hydro. Currently mining just takes the green energy capacity away from non-mining use, which never went away.
Bitcoin transactions do not, in and of themselves, consume mining energy. A Bitcoin block is validated by miners who use the same amount of energy, regardless if there are 1 or 1000 transactions in the block. Thus if Tesla cares about "energy per transaction", this metric can go down by actually increasing the number of transactions, ie. by continuing to accept Bitcoin as payments.
It's mind-boggling the number of people who can't wrap their head around this. The easiest way to reduce "energy per transaction" is to increase the number of transactions, whether it's on-chain, off-chain, or L2.
Last I heard, there was a physical limit to the number of transactions in a block (and no intent of increasing that number).
> this metric can go down by actually increasing the number of transactions, ie. continuing to accept Bitcoin as payments.
Are you implying that there are too few transactions to fill blocks right now, so Tesla accepting bitcoin will make blocks fuller?
You also seem to be fully ignoring that the main energy spend is in the mining, not the validation. More transactions (with fixed # of tx/10 min) = higher fees = more mining competition = more energy expenditure.
There is no limit when transactions happen in L2 (or off-chain)
«You also seem to be fully ignoring that the main energy spend is in the mining, not the validation»
Mining and validation are one and the same. A block simultaneously mines new coin and validates existing transactions.
Basically nobody uses L2 transactions.
The amount of actual money that goes through 2nd layer solutions, is very small compared to on chain transactions.
According to a fairly reliable source [1] it's actually $320 million (on the network + sidechains).
[1] https://twitter.com/DocumentingBTC/status/139252761698122957...
By 65 million in liquidity, I presume you mean the same ~1000 BTC that has always been on the network, for 2 years now. There has been a slight uptick, in the last 6 months, but the amount of BTC on the network has stayed basically the same.
I don't really consider "People put 1k bitcoin on the network, 2 years ago, and then never removed it" to be a good example of usage.
What matters is usage. How many people are actually using it in actual transactions. Not some nebulous misdirection to a concept of "liquidity".
A reduction of the value of Bitcoin would be the only thing that would result in less mining, as miners aren't incentivized to burn as much energy when the rewards aren't as valuable.
https://en.wikipedia.org/wiki/Bitcoin_scalability_problem#Ba...
I mean... I'm not saying Tesla's weird daliance with and then rejection of Bitcoin is particularly rational. I'm just saying it doesn't seem insincere.
The board of Tesla will have agreed the plans.
I wonder if a serious discussion will finally begin on moving Bitcoin to PoS. This will certainly have a strong opposition and will likely lead to a fork, i.e. two cryptocurrencies will exist at the same time, call them BTC-PoW and BTC-PoS.
In any case these news are a leap forward in the crypto space. IMO, replacing PoW by PoS is a bit like replacing incandescent light bulbs with LEDs at home.
Coins like Ethereum that have already proven that immutability isn't a core principle (DAO fork) are fine moving to PoS.
Most coins don't need their own PoW though. It's likely that we'll end up with one PoW chain and everyone else can periodically checkpoint themselves into bitcoin's immutable blockchain.
PoW doesn't protect you from a large enough cabal of power (in Eth's case, developers and whale bag holders) controlling the direction of the chain, or censoring entities they don't like from continuing to contribute.
What it does do is ensure that this large cabal can't erase history that happened. The only reason Ethereum was able to fork was because it was still young, they moved very fast, and there was enough external incentive from all parties to ignore the lost mining costs. And even with all that, Ethereum Classic still exists with all the PoW post DAO hack preserved.
On the other hand, PoS has no cost associated with writing the blockchain as far back as you want. If a majority cabal of stakers agree to rewrite history, they just do it. They can rewrite the chain from the dawn of proof of stake with whatever changes they want and it looks equally valid as the "true chain". No energy intensive hashes needed.
With PoS, you have to compromise a large enough number of stakers to mutate the chain. Very little cost after that.
With PoW, you not only have to compromise the miners, but you need to force them to burn tons of real world energy to catch up to the current block to rewrite the chain. Insanely expensive and effectively impossible the farther back in time you go.
The DAO reset was very controversial and people still talk about it years later. Prominent Ethereum devs have repeatedly stated there would not be a second one. This isn't to say it couldn't happen, but it would be a big deal and even more contentious and would lead to even more fallout than the first time, should it ever happen again. So it's not like big Eth holders can just get together and roll back the state at will.
Granted, it's still a concern any way you look at it for certain applications where you want absolute certainty over long periods of time, for example for having an immutable archive of events for future generations. Wouldn't it be great if all that electricity were used to provide a truly reliable historical record for the first time in human history? Bitcoin could be used to preserve news articles, encyclopedias and other such data. For everything else PoS chains seem a lot more practical though. We have to see the pros and cons, for most applications it makes no sense to sacrifice all the advantages good PoS implications bring for absolute long-term immutability.
Whether it's the Internet Archive, the Library of Congress, or your personal git repo, if there's some piece of data that you may want to be able to prove hasn't been altered, you check it into the blockchain.
For example, some powerful entity might be incentivized to try to change the text of old news stories to better support their current agenda. If you can change our understanding of history, you can potentially manipulate the future. Records that include proof of immutability will go a long way to making this kind of power play orders of magnitude harder and more expensive.
If you could take control of all the stakers, how much would it cost to rewrite the chain?
Answer this honestly and you'll see why people trust PoW much more than PoS.
> There’s another wrinkle: The Ethereum Foundation is on track to switch to a new consensus mechanism called “proof of stake”, and in that scenario, anyone who owns 14% of all ether will have tremendous control over the future blockchain.
Or, to quote Homer Simpson: https://www.youtube.com/watch?v=N8Yt4p_gJmY
This does not need to apply always. Does money have the value equal to production cost?
Cynicism aside, I was very curious if Musk can somehow push the crypto coins to be used as a currency. I guess that failed?
AFAIK manufacturing is a relatively low margin business that is sensible to price and supply fluctuations so it needs supply chain contracts for months if not years ahead which means using it as a currency that is not quickly converted to fiat must be like a huge challenge that only a financial machine building genius like Musk can solve.
Is there a data on how many cars were sold through BTC?
It really doesn't have anything to do with transactions(the fees are only a fraction of the profits). The energy impact would be precisely correlated to the fiat price since the miners will be paying for the energy and equipment in fiat.
Transactions or not, the higher the price, the dirtier the proof of work blockchain is.
Just look at the most recent block: https://www.blockchain.com/btc/block/00000000000000000002865...
reward: 6.25BTC fees for transactions: 0.5BTC
total revenue: 6.75BTC, that is ~ $350K at the moment.
Each block is mined every 10min on average, so it is 2.1M per hour. So the total energy consumption is limited to $2.1M per hour or $1.5B per month at this price. It would be $150M if the price was $5k instead and $30B if the price goes to $1M per BTC. When that happens, 1 transaction will amount to the energy consumption of an American family for 1 year or more. At $1M per BTC, $360,000,000,000 worth of energy would be wasted per year on calculating a hash of a block that is functionally exactly the same with the same amount of transaction as the one calculated for $360, $3.6 or $0.03.
I'm sure I'm missing something like investors betting on price increases, infrastructure elasticity etc. but the correlation must be roughly like that.
I think the reason people (media) talk about transactions is that blocks and mining rewards are hard to understand.
That is: the transactions did not (directly) cause that cost, but they are the "benefits" of incurring that cost. It makes sense to think about how many "benefits" you got from a given amount of costs, or inversely, how much cost there was for each unit of "benefit". To put it another way, if the costs are identical, it's better to have 1000000 transactions than just 100 transactions; "environmental impact per transaction" (or its inverse, "transactions per unit of environmental impact") captures that perfectly.
I don't think it's possible to decouple # of transactions and the price of Bitcoin though. Every additional Bitcoin transaction proves it is a feasible means of exchange, driving the price higher.
A transaction of that sorts would certainly trigger various anti-money laundering regulations where I am from (somewhere in the EU).
I also wonder if sometime in the next 6-12 months we'll hear that Tesla is looking to accept Dogecoin due to it being more environmentally responsible (I don't know if that is actually the case, but who knows what changes will happen in 6-12 months).
I mean his tweet right before this announcement was a poll asking just that, if Tesla should accept Dogecoin. So yeah. The guy is a clown.
Mainstream adoption, Visa & Goldman Sachs using it as a settlement layer, actual utility, defi, etc...
https://en.wikipedia.org/wiki/Silicon-burning_process
>When a star has completed the silicon-burning phase, no further fusion is possible. The star catastrophically collapses and may explode in what is known as a Type II supernova.
>The central portion of the star is now crushed into either a neutron star or, if the star is massive enough, a black hole. The outer layers of the star are blown off in an explosion known as a Type II supernova that lasts days to months.
I think something like this is the real reason for this move. Bitcoin is inefficient when it comes to energy use, so it's a bad choice for small transactions, but for a single, large transaction, the environmental costs aren't that bad compared to making a car.
What would have happened…
It’s ok to stop things and then start them later.
This reminds me of twitters “permanent suspension” instead of saying “banned” or “blocked” or “removed.”
Seems funny to use suspend that means temporary for things that just naturally end. Not the end of the world, but one more example of unclear, harder to understand speech.
https://www.reddit.com/r/dogecoin/comments/nb1rki/cryptocurr...
From ElegantPoop:
> Well, it would appear by this image we have ourselves a sub 1% of bitcoin per transaction. Winning.
> Q16. Will I recognize a gain or loss if I exchange my virtual currency for other property?
> A16. Yes. If you exchange virtual currency held as a capital asset for other property, including for goods or for another virtual currency, you will recognize a capital gain or loss. For more information on capital gains and capital losses, see Publication 544, Sales and Other Dispositions of Assets.
Source: https://www.irs.gov/individuals/international-taxpayers/freq...
Heck, even savings account interest is taxable.
Yes it does.
It would be same as if you purchased a large amount of gold, and then exchanged the gold for a car, after gold had increased in price.
In the gold situation, you would also pay capital gains, and the US treats crypto the same as property, in this regard.
Basically whenever you leave any financial position that increased in value for something not a financial asset then capitol gains are likely (there are exceptions)
But that's a great move for crypto as a whole : once the environmental issue is resolved in people's mind, crypto (not necessarily Bitcoins) might attract many more investors, and we will finally have GPUs!
Reminder: in 2017 woocommerce, square, steam, ... Started to add crypto currency as payment method and then removed it again.
He doesn’t strike me as the sort of the guy who would put his statement inside an image and I would expect him to understand enough about Bitcoin to know that there is no way to guarantee it being mined “sustainably”.
Ada can probably benefit a lot from this, since it's proof of stake instead of proof of work and has potential to be used as an actual currency.
IMO, Monero also has good fundamentals and use cases (privacy). It's PoW, but from a technical standpoint, it's much, much better than Bitcoin as both cash and store of value.
hmmm back of envelope math shows potential default if btc falls below 10k. https://greyenlightenment.com/2021/03/16/microstrategys-bad-...
I hope Mr Saylor saved some $ for the inevitable lawsuits. Very reckless on their part.
This is optimistic, to say the least. I think ETH2 is a great idea, and is headed in a great direction; but if you take a look at any of the client implementations (Prysm being the most popular), it's not exactly rock-solid software that I would stake $135,000 on. Not to mention that many of the proposed benefits of ETH2 are not in Phase 0. I mean hell, you can't even withdraw your validator's balance yet.
Thank you, Elon, for saving the environment with just a single tweet.
For many, who once believed in him, their eyes have been opened. More to come, I'm sure. Slowly but surely, humanists are starting to see that Elon isn't on their side...
Any of our sides... not even his own employees, customers, or shareholders.
... while Bitcoin secures its network through an energy intensive[2] proof-of-work scheme, Gridcoin uses a more energy efficient proof-of-stake system. ... nearly all of the energy goes to science - https://en.bitcoinwiki.org/wiki/GridCoin ... Gridcoin compensates researchers for contributing computational power towards BOINC research using an energy-efficient Proof-of-Stake process, instead of generating heat and using computational power for a Proof-of-Work algorithm ... nearly all of the energy goes to science - https://gridcoin.us/wiki/ ... do not require huge amounts of energy consumption to be mined. This makes PoS coins such as Gridcoin a more eco-friendly alternative .. - https://coincentral.com/what-is-gridcoin/ Altcoins like SolarCoin and GridCoin are better for the environment - https://medium.com/@johnniec/altcoins-like-solarcoin-and-gri... What if we could mine cryptocurrency using meaningful calculations with additional real-world benefits?- https://medium.com/adventures-in-volunteer-computing/cryptoc... Sustainable, efficient technology - With its unique PoR/PoS hybrid technology, the GRC blockchain uses PoS to secure its blockchain, while the entire computational capacity is devoted to performing computations for scientific research via PoR. This leads to a very efficient, and lean network, whose computational power is used for a noble purpose. - https://coinswitch.co/info/gridcoin/what-is-gridcoin One of the main advantages of Gridcoin is that crunching (“mining”) does useful scientific research - https://gridcoin.us/wiki/advantages-and-features Gridcoin attempts to address and ease the environmental energy impact of cryptocurrency mining through its proof-of-research and proof-of-stake protocols, as compared to the proof of work system used by Bitcoin - https://en.wikipedia.org/wiki/Gridcoin
The project can be found at https://gridcoin.us
p.s. the wallet can run on all major OS, the database will sync before you can finish you lunch and research crunching can be done on almost all devices including raspberrypi, android and old pcs
BTFD
Now I’ll take bets on what cryptocurrency they’ll settle on next. Will it be algorand? Avalanche? Celo? The choice will be hard.
I'm hoping the lines about not selling and looking at other cryptocurrency options are empty statements to save face.