Did Elon Musk Just Kneecap Bitcoin?

Elon musk may be concerned about Bitcoin’s environmental impact, but HIVE Blockchain (TSX:HIVE) has cleaner operations and represents the future of cryptocurrency.

| More on:
Big Bitcoin logo.

Image source: Getty Images

You’re reading a free article with opinions that may differ from The Motley Fool’s premium investing services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn more

Elon Musk’s adoption of Bitcoin was a game changer earlier this year. The billionaire entrepreneur decided to deploy US$1.5 billion (CA$1.8 billion) of his company’s balance sheet to the cryptocurrency in February. Since then, BTC has climbed 63% to an all-time high in April. 

However, Elon seems to have reconsidered his investment. In a statement published via Twitter yesterday, Elon expressed concerns about Bitcoin’s environmental impact. This caused an instant correction across the crypto market. Investors must now consider whether Elon’s change of heart indicates an end to the year-long bull cycle or an opportunity to buy the dip. 

Here’s a closer look. 

Elon Musk’s impact

For better or worse, Elon Musk commands tremendous attention from the tech community. His influence could have a direct correlation with SpaceX and Tesla’s ability to raise funds from public and private markets. His recent mentions of Dogecoin, a cryptocurrency that’s little more than a frivolous meme, also had a tangible impact. 

This is why Tesla’s adoption of Bitcoin was considered a green flag. As the first major corporation to add BTC to its balance sheet, Tesla validated cryptocurrencies as corporate treasury assets. This move made it more likely that other corporations could embrace Bitcoin in a similar way. 

However, Tesla has now decided to stop accepting BTC as payment for its products. Musk has assured his Twitter followers that Tesla won’t be selling any Bitcoin. However, he isn’t obligated to hold onto any asset. After all, Tesla did sell BTC worth US$275 million (CA$333 million) in its most recent quarter. They could certainly tap into this reserve in the future.  

Bitcoin’s environmental cost

Elon’s decision hinges on the environmental impact of Bitcoin — specifically the energy intensity of its mining. Bitcoin miners, across the world, operate larger server farms that solve mathematical puzzles to generate new BTC from the network. Much of this mining is done in China. However, in recent years, miners have established operations in countries with cleaner sources of electricity. 

HIVE Blockchain (TSX:HIVE), for instance, mostly operates BTC mines in Canada and Iceland. 99% of Iceland’s electricity is produced from renewable sources — 73% by hydropower plants and 26.8% from geothermal sources. Canada isn’t far behind. 67% of Canada’s electricity comes from renewable sources and 82% from non-GHG emitting sources.

Canada’s primary sources of electricity are hydro, wind, solar, and nuclear. Natural gas, a relatively cleaner fuel, is also part of the mix. That means HIVE’s carbon footprint is much smaller than its counterparts in other parts of the world. Each BTC it produces is relatively cleaner.

Meanwhile, the core Bitcoin development team is working on making each transaction more energy efficient. These updates, coupled with the gradual shift to renewable energy in the power grid, could drastically reduce Bitcoin’s environmental impact in the near future.

Bitcoin’s network isn’t clean right now. Corporations and investors who invest in this digital asset must recognize the environmental impact. However, if you’re a long-term investor, you may want to consider upcoming upgrades and the gradual migration of mining to greener countries. 

Bitcoin will need to overcome this issue to secure its position as the dominant digital asset. 

This article represents the opinion of the writer, who may disagree with the “official” recommendation position of a Motley Fool premium service or advisor. We’re Motley! Questioning an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and richer, so we sometimes publish articles that may not be in line with recommendations, rankings or other content.

Fool contributor Vishesh Raisinghani owns shares of Twitter. David Gardner owns shares of Tesla. Tom Gardner owns shares of Tesla and Twitter. The Motley Fool owns shares of and recommends Tesla and Twitter.

More on Tech Stocks

clock time
Tech Stocks

Now’s the Time to Load Up the TFSA With These 2 Top TSX Stocks

Here are two top TSX stocks that long-term growth investors may not want to give up on, especially at these…

Read more »

shopping online, e-commerce
Tech Stocks

Shopify (TSX:SHOP) Stock Recovers 30% From its 3-Year Lows: Should You Buy?

Shopify stock: Should you buy the dip or wait for more weakness?

Read more »

Businessman holding tablet and showing a growing virtual hologram of statistics, graph and chart with arrow up on dark background. Stock market. Business growth, planning and strategy concept
Tech Stocks

What Market Correction? 2 High-Growth Tech Stocks That Are on the Rise

I don’t think it will be long before these two Canadian tech stocks are back to delivering market-crushing returns.

Read more »

grow dividends
Tech Stocks

Why Kinaxis (TSX:KXS) Stock Jumped 14% Last Week

Kinaxis Inc. (TSX:KXS) stock popped over the past week after adding yet another big company to its impressive stable.

Read more »

potted green plant grows up in arrow shape
Tech Stocks

TFSA Investors: Double Your Investments With These 3 Top Growth Stocks

Despite the volatility, I am bullish on these three stocks, given their solid growth potential.

Read more »

Arrow descending on a graph
Tech Stocks

2 Industries That Saw the Worst Decline Last Month

The TSX has been declining at a sharp angle since the beginning of June. And two industries (crypto and cannabis)…

Read more »

Dividend Stocks

TFSA Investors: Turn $1,000 Into $10,000 in 10 Years

10-fold growth within a decade is rare but not unheard of. You can capture this growth either by predicting a…

Read more »

Growth from coins
Tech Stocks

Got $1,000? Buy These 3 Under-$20 Growth Stocks to Earn Higher Returns

These under-$20 growth stocks can deliver solid returns in the long run.

Read more »