The Bitcoin-Dogecoin saga that Elon Musk orchestrated in February seems to be coming to a climax. Three months back, Musk hinted you can buy a Tesla electric car with Bitcoin, but now he says you can’t. This is not the first time Musk had a change of heart. He has been under fire for his outrageous tweets and even paid a fine to the Securities Exchange Board (SEC) for his tweets. So what made him change his mind? He tweeted, “We are concerned about rapidly increasing use of fossil fuels for Bitcoin mining and transactions.”
Elon Musk says Bitcoin is not green
At the start of the year, Elon Musk hinted that Tesla might accept Bitcoin. Then in May, he created a Twitter poll asking people if they would want to pay for Tesla cars with Dogecoin? A visionary like Musk must have carried necessary due diligence before making such a statement. But little did he imagine that his one statement could send Bitcoin up from about $29,000 at the end of 2020 to almost $65,000 in April and Dogecoin up more than 3,000%.
The Musk-induced BTC rally accelerated Bitcoin mining. According to a Citigroup report, Bitcoin mining consumed 66 times more electricity than it did in the 2015 BTC frenzy. Another study estimates that electricity used in BTC mining is equivalent to the size of the annual electricity consumption of a small country like Sweden or Malaysia. And that level of electricity is not all renewable power. Musk highlighted concerns that coal-fired electricity is one of the worst fuel emissions.
On one hand, Musk is promoting green energy with electric cars. On the other hand, BTC is increasing carbon emission. That destroys the end goal of zero-carbon. So what is the solution?
Will Elon Musk’s concerns lead to the acceleration of green energy?
When the going gets tough, the tough get going. Bitcoin and other cryptocurrencies have potential. They are revolutionary game-changing innovations. If the problem is around carbon emission, it could lead to two things:
- People can switch to an eco-friendly cryptocurrency (Chia claims to be a green cryptocurrency)
- BTC and altcoin miners can switch to renewable energy-powered mining farms.
Hive Blockchain Technologies (TSXV:HIVE) uses renewable energy to run its data centre farms. Moreover, its data centres are in cold countries like Canada, Sweden, and Ireland, which leads to natural cooling. But Musk’s statement sent Hive’s stock down 12.15%. If this Bitcoin Go Green campaign picks up, these eco-friendly mining farms could see an influx of miners. That could drive Hive’s stock as it has more to it than BTC price.
Now the question is, how seriously should you take Musk’s tweets? Imagine, his one tweet pulled down the price of BTC by 13% and pushed Dogecoin to 3,000%.
A better alternative than Bitcoin
While BTC in itself is very volatile, it has opened opportunities for renewable energy. Think of it like this: People want to mine cryptocurrency, and companies are considering adopting BTC. This gives a motivation to invest in renewables. At the same time, many world governments are accelerating their investment in renewable.
In Canada, you have some renewable bets like Northland Power (TSX:NPI), which produces clean energy from offshore wind and solar power. It has 2.5 GW of renewable energy projects, and another 1.5 GW are under construction. Even if it is not the BTC mining, U.S. President Joe Biden’s clean energy package is a growth driver for the company.
Northland Power stock is down 16.7% year to date, but that has only increased its dividend yield to 3.17%. BTC investment is risky. Balance this risk with some stability, and Northland Power’s dividends can give you that.