Bitcoin powers towards $50K as Tesla takes it mainstream | Hacker News Reader

Bitcoin powers towards $50K as Tesla takes it mainstream

reuters.com

57 pointsmikesabbagh112 comments

Elon Musk has single-handedly made hundreds of millions of people into passive crypto investors.

Tesla stock is 1.9% of the S&P500 by weight, and Tesla's Bitcoin holdings makes up ~0.2% of Tesla's market cap. This means for every $100k that is invested into the S&P500, $3.50 goes into BTC.

I think the most impactful aspect of this is normalizing the idea for a company to hold bitcoin on their balance sheet.

the actual pioneer for this was Microstrategy https://cryptopotato.com/microstrategy-ceo-introduced-bitcoi...

Yup, Microstrategy pioneered it, but the brand power of Tesla will normalize it.

No one knows who MicroStrategy is. The impact comes from normalizing - CFOs can point to a Fortune 10 company as a precedent and buy bitcoin without looking completely foolish. Buying bitcoin can soon be normal as insuring against currency risk.

Elon has become the crypto maker or breaker. A single tweet of his can add billions of dollars to a coin's market cap. Incredibly powerful

Meanwhile "Tesla skips 401(k) match for third straight year". For all the future projections Musk claim to push forward, I wish employees empowerment and the betterment of the human condition could be a bit more on his mind.

More related to Tesla than to the story of this thread but I can't help feeling like we focus too much on one side of the equation here, I do believe better techs can mean a better life for all, but it's on us not to forget that second part otherwise it's a waste of innovation.

> I wish employees empowerment and the betterment of the human condition could be a bit more on his mind

Can't we have multiple solutions to this problem?

Some employers who match 401(k)s and do "human condition" things. Others who push their teams hard, pay them adequately (albeit not well) and give them equity so they win and lose together.

Focus should not be underrated. I'm not saying Musk is successful because Tesla doesn't match 401(k)s. But perhaps someone focussed on 401(k) matching isn't a great fit at every workplace.

>But perhaps someone focussed on 401(k) matching isn't a great fit at every workplace.

That's a really good point. An argument could be made that this is rooted in age discrimination. I'm willing to bet my paycheck that older people are more concerned about 401k match. Anecdata: as i've gotten older 401k match is more important to me.

> Can't we have multiple solutions to this problem?

We probably can, but that's not what you suggest.

> Some employers who match 401(k)s and do "human condition" things. Others who push their teams hard, pay them adequately (albeit not well) and give them equity so they win and lose together.

You make the false assumption that you can't pay well your employees if you push them hard, as if it was an either/or. You can pay well your employees or not. You can push your employees and ask them to do more than average or not.

Choosing to push them yet not pay them well is a specific choice that gives the maximum value to the company at the expanse of its employees, and then the word you are looking for is not "push", it is "exploit". It is a logic that doesn't work, which is why company values skyrocket while salary stagnate.

I do find that doing this while also investing gigantic sums on something that has nothing to do with your core business is a bit unsavory.

There are plenty of companies out there, small and big, that push their employees well above and beyond, but compensate that by also paying them very well. That is also what I am doing at my own company and I've been successful doing so, and I've never had to play the "you're getting screwed for the betterment or humanity, but don't worry maybe someday you will be rich" card.

> I'm not saying Musk is successful because Tesla doesn't match 401(k)s. But perhaps someone focussed on 401(k) matching isn't a great fit at every workplace.

Absolutely. I'm not saying it in a vaccum, I'm saying that in the context of Tesla doing both of those action (the 401k and the Bitcoin thing) simultaneously. You put the context on the employees but I put it on Musk/Tesla. In the goal of improving the future, I think that is the wrong direction and choice.

>You make the false assumption that you can't pay well your employees if you push them hard, as if it was an either/or. You can pay well your employees or not. You can push your employees and ask them to do more than average or not.

That wasn't an assumption, that was a suggestion that both of these could exist in different permutations. The fact that they there is tension between these two methods doesn't mean they're a binary and mutually exclusive, and that's not how I read GPs comment.

You didn't actually address the point either, which was the notion of doubling down and investing in yourselves as a company instead of hedging with a 401k. It is interesting how you interpret this idea for your own company.

>I do find that doing this while also investing gigantic sums on something that has nothing to do with your core business is a bit unsavory.

I see this as not very relevant to the previous points so I address it separately.

Effectively once your company's revenue and value moves beyond 7 digits, I would argue that financial paradigms have everything to do with your business regardless of what it is.

> But perhaps someone focussed on 401(k) matching isn't a great fit at every workplace.

With the right accent you can play a number of fictional villains.

Seems like a bit weird. One side he wants to save the planet and the other side he buys bitcoin that uses tons and tons of energy to even exist and operate. Let alone the other problems with bitcoins.

Well, if he buys up all the Bitcoin it should use less energy right? (joke)

One reasoning I've heard is that he absolutely despises the levers and players of traditional finance, so this entry into BTC is another big f*ckyou to Wall Street.

That's ironic, given how he's used said levers and players and Wall Street to become the richest person in the world.

Majority of bitcoin mining is done with renewables[1]. In fact, it won't be long, only mining with renewables may be profitable.

1. https://www.vox.com/2019/6/18/18642645/bitcoin-energy-price-...

Doesn't seem true https://www.bloomberg.com/news/articles/2021-02-09/tesla-s-b...

Bloomberg just published an article on how some Russian company broke AES encryption.

How about we try to deal with facts rather than google search proofs

A huge amount of mining is located around Sichuan province, China or Pacific NW United States, all of it hydro-powered and excess electricity. Others players in the field are chasing wasted flaring from oil/gas fields and using that to power shipping containers full of ASIC's.

This argument gets tiring because at this point if there a large amount of wasted energy anywhere on Earth someone will eventually realise they could mine crypto with it instead. Heat, gas, you name it, everything is on the table.

Meanwhile we all lament not being able to take international flights for a year.

"there's a chance" that "new bitcoins mined" "will"

The opening statement is in a completely different tense than yours, AND hypothetical.

The parent link also says "A new report claims it’s mostly powered by renewables. Be skeptical."

I don't try to say it is true or false. I give an alternative point of view.

Let's also hear the other side https://www.coindesk.com/what-bloomberg-gets-wrong-about-bit...

The tl;dr of that article: "It's not fair comparing Bitcoin to Visa because you forgot to account for the energy consumption of aircraft carriers in the latter" [1].

These kinds of takes don't help Bitcoin, or cryptocurrency in general. Bitcoin has an energy problem. Trying to hide that fact by demanding comparisons against the entire financial industry instead of just whatever you're trying to compete against for end-users (be it settlement or end-user financial transactions) isn't going to help, because that's even more scale that Bitcoin would have to struggle even harder to reach. And it raises the question of what value you actually get from avoiding the infrastructure (and the resulting economies of scale) that everyone else uses.

[1] Admittedly, that is a bit unfair, since the aircraft carriers aren't mentioned until the very last paragraph. But the article does repeatedly push for comparing against larger and larger segments of the financial system, giving the distinct impression that the author would complain about unfair comparisons should Bitcoin be found to use more energy than anything being compared.

VISA wouldn't exist without banks. It wouldn't exist without the whole hierarchy of contracts and licenses that allow transactions across borders. Bitcoin has all of that solved by the protocol itself, so yes, comparing VISA to Bitcoin is very much skewed, VISA is doing just a very small part of what Bitcoin can do. Maybe comparing Lightning Network to VISA would be a bit better, but still not completely fair, because lightning is independent of central authorities.

But the second important point of the article is that the sources who say that "Bitcoin has an energy problem" usually come to that conclusion by taking average electricity price and multiplying it by total Bitcoin network hashrate. They (intentionally?) omit the fact that Bitcoin mining is by design just barely profitable. The difficulty rebalances itself according to the Bitcoin price, energy price and number of miners. That means that for the miner mining bitcoin was probably the better alternative use for that energy in that particular situation. If it wasn't, other people would have used the energy for something else (more needed/more profitable/..) and the miner would be priced out of the market - and that would be totally ok for the Bitcoin network, that's the design.

Yet another point is that currently the mining is still subsidized by the issuance of new Bitcoins, which is still higher than the transaction fees. But that will soon stop being the case, quite likely within the next 4 years. When miners are motivated primarily by fees, then the economic pressure will force them to reject small-fee transactions and that will move Bitcoin on-chain transactions to similar position as the international fiat settlements. Coffee will be paid with lightning, on-chain will settle big blocks of transactions worth millions of dollars, where a $100 fee is no problem, and the overall energy use of the whole network won't rise any more - exactly as designed.

I mean; the article even states that you should be skeptical of that statement: "it’s mostly powered by renewables. Be skeptical"

And exactly all that energy cannot be used for other purposes.

The problem is this energy could be used to replace other “dirty” energy. Energy supply is limited.

That article literally says to be skeptical of that claim. Anyways, it's still consuming electricity on grids that include non-renewables. The more "renewable" power wasted on Bitcoin, the less can be used for everything else, and the more non-renewable power needed for everything else. No?

It doesn't actually matter; it uses energy, increasing the total energy demand of the world. Other uses (like charging up EV's) also need energy.

It seems like the effort to turn energy production towards renewables (that is, replace carbon emitting means with renewables) is undone by increased energy demand. So instead of replacing the one with the other, we have to keep the old methods around just to meet demand.

>It doesn't actually matter; it uses energy, increasing the total energy demand of the world. Other uses (like charging up EV's) also need energy.

This is only partially true. One watt of hydro electricity might equal to another watt of coal electricity, but it's also locked to a particular region (because there's no global electricity grid) and a particular point in time (because you can't "store" electricity cheaply like oil).

>So instead of replacing the one with the other, we have to keep the old methods around just to meet demand.

Long-term causality is pro-bitcoin. Just like with network bandwidth usage, "whales" (heavy users) drive and finance the build-out and the R&D.

Cryptos with less of a footprint are on the way. This issue will be solved.

In the meantime after a year of the US government printing 20% of all dollars ever made, perhaps an alternative form of currency is a slightly more complex issue than just it destroying the environment. Maybe some people realise the monetary crisis that's inevitably coming.

Yet most people purchasing Bitcoin are treating it as an asset denominated in USD, not a currency.

They're also treating it like an MLM - where they know if any significant amount of people sell before regulatory capture occurs - then their Ponzi-Pyramid scheme will crash; the ones with the most to lose are the later adopters who buy high, and ones with the most to gain are the earlier adopters as gains are weighted towards earlier adopters. It's quite the clusterfuck.

The first counterargument always seems to be that at some point in future the energy consumption problem will be solved, but isn't the rate of computation a or the main factor against 50%+ attacks? Else the solutions proposed seemed to rely on centralized services that don't actually play on the blockchain to reduce the actual amount of transactions and load, also then avoiding the delays - but then re-adding the supposed main issue of having a "trustless" blockchain.

No, there are other systems that work to solve the same trust issue such as Proof of Stake or Delegated Proof of Stake, as well as other variations on that theme.

The issue will be getting people to use something other than Bitcoin, not solving the technical challenge. Bitcoin mining will always be Proof of Work, and thus energy-intensive.

It's simple: democratically elected governments (save regulatory capture skewing policy to self-interests, continuing the status quo of directing policy to benefit certain individuals more than society as a whole) can create a blockchain with failsafes, without the Ponzi/MLM scheme/wealth transfer from later adopters to earlier adopters, and make it mandatory to use.

No his point is not about limitless energy or about off-chain transactions.

It is about a proof-of-stake scheme like ETH2 where the blockchain is still immutable, but due to a purely abstracted notion of "mining" which rather than electricity at all relies upon mechanisms where attempts to mutate the blockchain turn into pointless losses of money.

It is fully trustless, and I would argue even more trustless because it is accessible to all users, unlike mining.

Can't such a blockchain structure exist where there's no transfer of wealth from weighted from the later adopters to the earlier adopters?

Who is solving it, and how ?

"proof of work", is by definition waste.

They will have to do something than increasing difficulty and and an ever increasing transaction log, as both are unsustainable.

Tesla could have legitimized one of them by choosing one of them instead. I don't think Tesla investing into BTC really helps the alternative PoS chains all that much.

Bitcoin is risky enough, you want them to store a billion dollars in a currency that is much much more risky?

There's nothing about the way Bitcoin is created (via massive energy draw) that makes it especially useful as an alternative form of currency. It was just there first.

It would be very weird if governments don't end up heavily regulating cryptos to the point of extinction, due to their inability to block, forbid, sanction, track (to some degree), including money laundering, "know your customer", tax, apply financial regulations in general.

I feel like this is something that shouldn’t need to be said but based on the numerous identical posts like this I feel gobsmacked to not say it.

He’s a businessman not a philanthropist. His sales pitch was using the thing millennials care about to get them invested (both emotionally and with capital) in his company. We got played by Elon.

Reposting a comment I made yesterday:

"Bitcoin is almost as bs as fiat money" - Elon Musk, https://twitter.com/elonmusk/status/1340588909974200321 E.g. it's still not the ideal, final solution - but Tesla seemingly aligning to being on the side of the "army of HODLers" makes business sense; you don't want that army that's financially incentivized via the MLM/pyramid scheme that it is to start rallying against you and your products/services.

My take? It was a savvy PR move to cushion the China news. Tesla had to kowtow Beijing in a way that could have lit real political fires. Politicians are distracted. The Bitcoin announcement took care of the base.

Also, it’s a good economic move. $1.5bn bought $8bn of market cap appreciation, which Musk can likely turn into more than $1.5bn of new cash. Tesla scaling faster does more for the environment than some bubs buying Bitcoin.

The distraction worked on me cause I didn’t even hear about it! What was the China news regarding Tesla?

> One side he wants to save the planet

In what way would Elon Musk save the planet ?

edit: no but really, do you think replacing 1.4B ICE cars with 1.4B electric cars powered by non recyclable rare earth batteries will "save the planet" ?

Or maybe migrating to Mars while we can't even sustain life on Earth which is the perfect eco system we evolved to strive on ?

Or is it starlink that will "save the planet" by providing facebook, instagram and 4k netflix to the world ?

People believing in these pipe dreams are so disconnected from reality... I don't even know what to tell them. Musk is a brilliant business man, engineer, visionary maybe, but he won't save the planet more than Amazon or Apple would

> no but really, do you think replacing 1.4B ICE cars with 1.4B electric cars powered by non recyclable rare earth batteries will "save the planet" ?

Ah, let me clue you in. You may have heard of something called climate change. It is a phenomenon where the atmospheric concentration of certain gases is increasing rapidly, causing substantial and harmful changes in the global climate. It is heavily driven by human co2 emissions, a significant portion of which come from ICE vehicles. Electric vehicles are capable of being powered entirely by clean energy, whereas ICE vehicles, not so much. Switching to all electric vehicles is an important step we must take to combat climate change.

NASA has a great website where you can learn more about climate change: https://climate.nasa.gov. There are many other sources as well.

save the planet ? Do you think planet need human to survive ?

While true, mining seems more analogous to high frequency trading where the most profitable mining operations seek to eke out every single advantage they possibly can in the unit economics to maximize profit. If energy is an input and money/profit is the output, then the mining market would obviously seek out the cheapest energy, which happens to be wind and solar. Intuitively, it's far more profitable to operate ASIC farms on cheap land in the middle of Nevada powered by solar panels than operating a similarly sized network off of the coal sourced power grid in West Virginia. The former has somewhat high upfront cost, but basically zero marginal cost, and amounts to essentially free money in the long run. While there will always exist a small set of "retail" miners that don't care about the source as long as they make some profit, mining will probably converge towards some power-law distribution (just like every other financial market) where 80-90% of mining activity will be done by a small minority of big/rich institutional miners that explicitly seek out cheap (read: clean) energy.

Obviously this is only theory, and the devil is in the details, but the empirical results appear to corroborate that theory.

The IEA did a report on the Bitcoin footprint: https://www.iea.org/commentaries/bitcoin-energy-use-mined-th...

> Around 60% to 70% of bitcoin is currently mined in China, where more than two-thirds of electricity generation comes from coal. But bitcoin mining facilities are concentrated in remote areas of China with rich hydro or wind resources (cheap electricity), with about 80% of Chinese bitcoin mining occurring in hydro-rich Sichuan province. These mining facilities may be absorbing overcapacity in some of these regions, using renewable energy that would otherwise be unused, given difficulties in matching these rich wind and hydro resources with demand centres on the coast.

> Electricity generation in other key bitcoin mining centres are also dominated by renewables, including Iceland (100%), Quebec (99.8%), British Columbia (98.4%), Norway (98%), and Georgia (81%). Globally, one analysis estimates that the bitcoin is powered by at least 74% renewable electricity as of June 2019. Another analysis of data from 93 mining facilities (representing 1.7 GW, or about a third of global mining capacity) estimates that 76% of the identified energy mix includes renewables.

Another report, https://coinshares.com/assets/resources/Research/bitcoin-min...:

> Furthermore, we show that Bitcoin mining is mainly located in global regions where there are ample supplies of renewable electricity available. And finally, we calculate an estimate of the renewables penetration in the energy mix powering the Bitcoin mining network at 73%, making Bitcoin mining more renewables-driven than almost every other large-scale industry in the world. Our renewables estimate has marginally dropped since our last report, reflecting increased levels of mining in low-renewables regions such as Kazakhstan. However, we still caution that our location estimates likely have error margins of ±5% and should be considered within that context.

If you believe all this to be true, then you could reasonably conclude that Bitcoin stimulates the demand for cheap (read: clean) energy, and Elon Musk just took a big step towards perpetuating that stimulus.

A relevant tweet that blithely captures Elon Musk's calculus: https://twitter.com/NeerajKA/status/1358788953713836033

>that uses tons and tons of energy to even exist and operate

Compared to what? The banking industry? Do you know how much it takes to send/secure 100 tons of gold? bitcoin comparatively is minuscule, energy use is going to increase whether you like it or not, the alternative is starvation and death, africa alone is going to double the energy use before long, in the process saving millions from starvation.

Overhyped cryptocurrency fueled by an overvalued EV startup... Bravo. These two seem to love each other...

(I am not against Cryptos but e.g. ETH seems way more usable to me and I am not against EVs but the price tag on a TSLA share is ridicules)

Yeah I'm of the opinion that Ethereum is the top dog, but it will take some time for that to be realized since Bitcoin has the first mover advantage, brand name, is simpler to understand, and is everyone's first exposure to the market.

This is getting ridiculous. It's just bubbles upon bubbles upon bubbles.

He's been pumping doge to his followers then goes and buys BTC. Nice move.

We should have put more thought into it.

I personally thought he was just having fun with doge (smoking pot, listening to Darude and tweeting..) while in actuality was a cryptic sign that something much more substantial was going on under the covers..

It seems I will never afford a GPU to play some games..

Good thing Bitcoin mining hasn’t been done with GPUs in several years. You can blame cryptocurrency mining for the high GPU prices but not Bitcoin mining.

As I understand the cryptocurrency markets, they basically all move in tandem with Bitcoin. So if Bitcoin's price goes up, so do all other cryptocurrencies.

Also instructive to see prices of altcoins in terms of BTC. Barely anything moves up. There are very temporary spikes, but mostly it's all one giant opportunity cost compared to just holding BTC.

Agreed.

PS: Cool to see you here on HN, I have been a long time follower on Twitter.

Speak for yourself. I'm currently earning $13-15 a day by mining with my RTX 3090.

The RTX 3090 FE costs around $1500 after tax, but I bought it off craigslist for $2000 (after fruitlessly waiting for months for the stock to become available). I should have just bought it back off craigslist back in September or October. If I had paid the scalper prices and just started mining with it back then, it would have already almost paid for itself by now.

What are your electricity costs?

You're mining another cryptocurrency, not Bitcoin. Maybe you're using a multipool that pays out in BTC.

What are you mining?

Yeah, I thought that people mine Ethereum with GPUs, which is somehow related to BTC in terms of price (I have no idea how tho, I guess people trade ETH for BTC and vice versa)

One possible rational explanation for this (apart from the usual Elon's trolling) is a mostly legal way for Tesla to bribe some Chinese Bitcoin mining controlling interests

What stops him from issuing something like ERC-721 Tokens for his cars? You'd be able to do cool things, like you'd be able to trade it P2P, or do stuff like unlock it with your MetaMask wallet and the whole infrastructure is already here. For me doing this would be a logical next step at some point.

He first needs to discover Ethereum and broaden his horizens.

Bitcoin's lowest price was $5k on the 12th day of march. Not only is that extreme cherry picking. The calculation is still wrong. That's only a gain of 820%. If you bought BTC on a random day in 2020 you're more likely to have paid 8k-10k for it. Suddenly we are back to the usual 300%+ gains.

saying "300%+ gains" and "_usual_" in one sentence is only to some folks out there usual :)

I really like Bitcoin as a technology and as a statement of decentralized control, but I really hate the power consumption - which is becoming increasingly hard to ignore.

How do we kill it?

> How do we kill it?

Isn't the root problem the dirtiness of our (and specifically, China's) power generation?

If not, if power usage is a problem per se to someone, aren't there better targets?

Energy is such a huge and all-encompassing problem that we need to pull on all the energy levers we have - more sources, cleaner sources, safer sources, more storage, lower losses in distribution, greater efficiency in consumption, smarter allocation of consumption...

The answer is always Competition.

Pitting one bunch of mindlessly ambitious lunatics against another bunch of mindlessly ambitious lunatics is Natures way of reducing the odds of everyone going extinct - https://en.wikipedia.org/wiki/Red_Queen_hypothesis

Why kill it? Embrace it. The power consumption is solved by renewables.

It isn’t, because there’s no cap on it. Cover the planet in solar panels and Bitcoin still might consume more.

Realize Bitcoins are horrible, get govts to ban it in favor of Ethereum once it gets POS and all the layer 2 stuff.

Maybe POW coins could fork together into some sort of side chain on Ethereum so they retain their current values, but move completely to PoS instead.

It'd probably be best if the thought leaders of Bitcoin based coins joined forces with the DAO's running Ethereum and figure a way to preserve the most "wealth" locked up in bitcoin while migrating to Ethereum chains.

I wonder how it compares to all the power used for the Super Bowl (at the stadium, transportation, broadcasting, viewing, creating commercials, etc)

Next step, Tesla makes an ICO

I'm honestly suprised this hasn't happened already. Just imagine the levels of absurdity that the hype could reach.

So how does it all work? Market cap and price only has weak connections against each other right?

Wrong. Market cap and price are the same thing.

market cap = price * units outstanding.

For bitcoin, the change in units outstanding is negligible, so price is directly tied to market cap.

> For bitcoin, the change in units outstanding is negligible, so price is directly tied to market cap.

Market cap is a meaningless metric for Bitcoin.

With companies, the whole company legally exists and gets bought and sold and pays dividends and goes bankrupt. Nobody operates on the whole with cryptocurrencies. Cryptocurrency "market caps" are a vanity figure.

Tesla made a (paper) profit of $642M on that announcement.

Can you imagine this CFO? First, Reddit ceaselessly pumps his stock. Then, he makes more revenue overnight than most full companies do in a year through bitcoin.

Kind of convenient that we, in the US, have such blind faith in the only major EV manufacturer, come to think of it.

It's not blind faith, it's tons of people jumping on the bandwagon whenever Musk farts, because he makes the markets shift, because tons of people jump on the bandwagon whenever he farts.

Increased bitcoin price leads, due to the economic equilibrium on which bitcoin rests, to greater energy usage and greater emissions.

Bitcoin already emits as much carbon as the nation of New Zealand. It emits ten times more carbon per year than Tesla, according to their own numbers, have saved over the lifetime of the company.

Increasing the bitcoin price by just 10% will eventually lead to an increase in emissions that will wipe out all of Tesla's environmental gains in a year.

That's why Ethereum is the future. It's where all innovation is happening anyways.

It will take time for people to realize because Ethereum is so much more complex that Bitcoin. But it will happen eventually and inevitably imo.

For some applications, yes. I believe Stellar (XLM) is the future for transferring money across borders.

the repo looks pretty dead https://github.com/ethereum/go-ethereum/graphs/contributors

That's pretty selective lol. Why not use one of their main repos? It's almost like you have an ulterior motive.

the official ethereum client is not one of their main repo?

what is?

One could also argue that the power used by the vehicles themselves contributes to increased emissions.

I think the only way forward here is to generate electricity as cleanly as possible. That way we won't get bogged down in arguments about amazon's terawatt-hours being more worthwhile than those of facebook or bitcoin.

That's exactly why people advocate for carbon taxes. Instead of guilt tripping people you just add a financial tradeoff for pollution. Businesses don't understand morals but they do understand money and once you give them a profit motive they are willing to eat their polluting competitors for lunch.

Or we could also seek to reduce our consumption of energy, thus lowering the overall requirement to produce it by any means, including the dirty ones.

But hey, fuck that, there's a chance to get rich here so the planet can suck it.

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