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Comment by hristov | Hacker News Reader

So multiple people have noted that the environmental concerns were exactly the same and very well known when Tesla originally started taking bitcoin as payment.

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.

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the biggest notable difference between then and now is then bitcoin seemed to be going only up. Now it seems to be going down

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.

> 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.

Someday, in the future:

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...

Yea, my hind-sight portfolio is really kicking ass.

The advice I remember was: “If it’s low, buy. If it’s high, buy.”

Since Day 1 - Bitcoin was worth 1000+ Bitcoins to 1 USD. Yesterday it took $59,000 USD to buy 1 Bitcoin.

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".

Yes it's being going up overall (a lot), but even if you just look at a chart of the last 12 months, it hasn't dipped more now than it did a few times last year - I can see why some people think it's going to keep going up for a long time, and others the opposite, but I can't see why anyone would think "great it's always going up" until now and be scared by a relatively minor dip down here.

My point exactly

"past performance... future returns"

The S&P keeps going up because if it went down the fed would lower interest rates until it started going up again.

For that very reason, most businesses who accept bitcoin and other crypto (including Tesla, probably) don't actually keep the crypto, they immediately convert to traditional currency.

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.

There is nothing dumb about what Musk and Tesla did, in fact it was for self gain.

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.

And now that its down, they're probably buying more.

They can get 5-10B in it, then Elon can pump it up more.

A month later I'm sure Elon will be talking about how he sold solar roofs and batteries to miners and is again accepting BTC and Doge.

Or maybe he just adds ASICS to the gigs factories to get a certain level of control over the mining economy.

Honestly, when is the guy going to get charged by the SEC for market manipulation? It is fairly obvious he knows what he is doing with the crypto market and making a good chunk of change on it through his social media influence. But he also does it with Tesla (I know he got charged that one time but he's been a repeat offender).

Bitcoin is not a security nor a protected commodity market, so does the SEC even have jurisdiction?

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.

Bitcoin is regulated in the US under both the Commodities Futures Commission and the Securities Exchange Commission. These tend to be fairly narrow rules about contracts for arbitrage, know your customer rules, etc. I have no idea if they have authority over pump-and-dumps

It's not illegal to buy a stock and tell people you bought it. There are entire businesses whose model is "make an investment, and then tell other people why you made it hoping they will make the same one". This isn't criminal, it's good business practice.

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.

It sure is illegal to say "the stock of the company that I'm the CEO of is too high."

I fear the US government might allow Elon Musk get away with anything, as long as he keeps launching satellites for the military.

BTC is not under SEC ( or even any) regulation for pump and dump schemes.

It's not dumb, all mayor central banks of the planet have printed 50% of GDP on their currencies including the dollar to deal with the pandemic. That means that you risk losing 50% of the value of your cash, so you invest it and you diversify to protect yourself, but because everybody with money is doing exactly that, you have massive asset bubbles that also risk your money, so its hard to find something to invest in.

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.

Elon didn’t take a bet.

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.

Those units don't even make sense.

New money as a percentage of GDP?

They made more money doing that than selling cars.

Tesla publicly stated when they started accepting bitcoin that they would hold onto it as cryptocurrency, not sell it.

What percent of Tesla customers are buying their cars with bitcoins? I doubt it’s more than 1 out of 100, I think it was just a publicity stunt both times, media talked about Tesla when they started accepting them and will talk about them again when they decided to stop it.

It was a classic pump-and-dump if you ask me.

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...

Like him or hate him, I don't think you can tar him with the "figurehead" brush.

It's a figure of speech and meant to be completely neutral and independent of the actual person. Just like "the face of the company", e.g. Pat Gelsinger in the case of Intel or Tim Cook for Apple.

"figurehead" is a word with a meaning. "Head" and "face" have different meanings.

"Face of the company" and "figurehead" have different meanings. The latter is pejorative. From the dictionary: "a person who is head of a group, company, etc., in title but actually has no real authority or responsibility".

  >Face of the company" and "figurehead" have different meanings. The latter is pejorative..

Figurehead is not a pejorative term. Quite the reverse.

Consult a dictionary: "A nominal leader or head without real power".

If the market going up again (Step 4) is a sure thing, then Step 3 is obviously sub-optimal. If that is not a sure thing, then they've still got a potential ~$1B net loss.

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.

This is probably knowable. Aren't transactions public?

I think you are quite obviously correct. But this is Hacker News. Not (hypothetical handwave) Marketer News. On that (\1) site, your comment would be brutally downvoted for obviousness. ;)

This has changed:

“Private-equity firm revives zombie fossil-fuel power plant to mine bitcoin”

https://arstechnica.com/tech-policy/2021/05/private-equity-f...

That plant was restarted in 2017 and has had a mining data center at least since early 2020.

Scale and expansion plans only became available on recent S4 filing. That’s new info. Tesla probably doesn’t want to contribute to the trend and hence the change of heart.

A relatively small SPAC caused them to realize the obvious?

If that is the case, what was going on before?

I think it's probably indicative of a trend that Tesla doesn't want to incentivize any further. Tesla's mission is all about moving away from fossil fuels.

Prior, lean was towards renewable sources like hydro because of lower cost of surplus energy.

Agreed. And for the cynics: Tesla is gonna lose goodwill and clean energy cred if their brand is tied to stuff like this. It became increasingly clear Bitcoin is overall not in Tesla’s interests.

bitcoin was already unpopular with environmentalists when tesla started accepting it

I am pro Tesla as a company and own a model Y, but this news was upsetting and frustrating to me. Exactly what changed from a few months ago when they announced their Bitcoin position and that they would accept payment? They knew damn well about mining in China being almost exclusively coal and that mining is extremely bad for the environment.

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.

The most reasonable explanation is that Tesla/Elon don't actually care about the environment and if it's going to suffer in their pursuit of whatever financial scheming and/or vanity, so be it.

Or he thinks that the best thing to do for the environment is to pump up Tesla by any means necessary.

I have really lost a ton of respect for Elon in the past few week.

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.

> Musk smartly decided he did not want to risk his half a trillion dollar company on random bitcoin fluctuations.

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.

What is on your list? NET? DDOG? CRWD?

Why is the commodity market signaling we're close to the 9th inning?

Or, did someone higher up leak information to Musk on upcoming regulation?

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.)

That doesn't make sense, they are still holding a very large amount of it, why would they put this out and decrease the value of their own holdings?

Isn't it possible they're dumping the rest of their holdings?

That or they are certain they will get burned sooner or later, and therefore even if they tank the value of their holdings it's at a time of their choosing and with an amount that's predictable.

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.

The statement in the tweet said that they won't sell.

That is as amendable as the policy of accepting payment in bitcoin was - and right now, with Tesla having a nontrivial position in bitcoin and with Musk being an influencer of bitcoin price, it is in the company's interest for him to say that it is not going to sell, even if it reverses that policy tomorrow.

To buy more at a lower price?

Could Tesla not have just decided that any new purchases would be converted to the dollar immediately? Accepting Bitcoin doesn’t necessarily mean holding Bitcoin and holding is where valuation matters. If I’m right about that it sounds like this could have a somewhat environmentally conscious motive.

Volatility was well known and they could just convert to cash on receipt if that was the problem. More likely he was pressured to stop accepting it for payment. But by who?

Who cares if it goes up and down if you are convinced that BTC will be the currency of the future?

From a BTC perspective USD is very volatile!

One cannot eat delusion.

Should I tell that to a colleague who retired with millions in fiat made from the last BTC run?

Why did he/she retire with millions in fiat if BTC is the future?

Because we're not in the future yet.

This makes no sense, his tweet alone has helped drive BTC down 10%.

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.

Well, the other thing that changed is that the woke mob was throwing a lot of flack at Elon and TSLA about Bitcoin’s environmental impact. As an EV company, they likely want consumer sentiment to view them as having a positive environmental impact.

Pump and dump

It says right there that they are holding onto their bitcoin assets. Assuming that's true, there's no way this is a pump and dump, because there was no dump.

Okay well then maybe not. I don’t imagine Elon would hurt TSLA to get a discount on BTC

You can borrow against it, and that wouldn't be a taxable event. Not sure what % of your portfolio lenders allow though.

It's not really about taxable events so much as possessing a financial interest. Using it as collateral doesn't get it off your balance sheet, nor does it negate the influence of any price swings. If anything, it intensifies them, since a downward swing (say, in response to a tweet saying you're no longer three rocket emoji Bitcoin, only two rocket emoji Bitcoin) might trigger a margin call.

I disagree...

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.

I mean, if there's one thing we can all definitely agree on it's that dogecoin has no where to go but up at this point.

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.'

Dogecoin is neither deflationary, nor does it have a fixed supply. It's not going to be a thing beyond a lot of poor fools getting rekt when their techno king abandons it for his next meme fetish.

> 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.

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.

Well, guarantee after today, pretty much whoever held both bitcoin (and/or possibly other crypto) and Tesla stock, will be selling all of the Tesla stock, at minimum. He made a bunch of enemies today, intentional or not.

I've sold my TSLA weeks ago but I am keeping my crypto ;)

I never had TSLA because it never made sense to me why it was so high, but if I did I would definitely have sold it today. Was actually somewhat considering the new Model 3 for my next car, but now I'll look into other EVs instead. Still buying crypto.

This seems so petty, he caused bitcoin and other crypto to go 5x. Maybe some very recent buyers are affected but the vast majority made out like bandits, and can lock in their profits by selling btc off now.

Bitcoin didn't go 5x just because of him. It was already on an upward trajectory, breaking new all-time-highs, and around 30k, if I remember correctly, when he made the announcement that Tesla bought bitcoin and is accepting it.

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).

Bitcoin fluctuations didn't become a problem when Musk purchased bitcoin, they have always been commonplace.

Can't he short some Bitcoin futures when they make a sale, to eliminate volatility as a concern?

this.

All it means is that they're effectively "holding bitcoin," or otherwise exposed to its fluctuations. They're doing that anyway. It's not really different from holding forex, stocks or any other risky asset.

Nothing changed. As the men himself said, it's a hustle.

The company probably made a lot of money with this maneuver.

> Now it seems to be going down.

You mean just over the last month?

It’s still up 5x yoy

Decision to go into bitcoin was smart and also decision to back off was smart. Musk is the only person who can do or say two contradictory things and both are smart. He really is a genius

You're giving him a bit too much credit. He should have never made Tesla invest money in BTC, that's just a bad PR move. Now they have to do damage control.

I think they’re being sarcastic.

this should be easy to hedge though

  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.

Doesn't compute. If Euro/USD goes down by few basis points would one stop selling cars priced in euro?

They can always price cars based on BTC's price and liquidate it to fiat or cryptocurrency of their choice.

If Euro/USD goes down by few basis points would one stop selling cars priced in euro?

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

Stable currencies may move a few basis points from day to day. BTC can move hundreds or thousands of basis points.

What I'm saying is that they can sell cars in BTC without any volatility exposure. The price going down is not the reason for them deciding against selling cars in BTC but the energy subsidies.

Except they also had 2? Billion in Bitcoin holdings. So the float up and down had an impact?

They didn't sell their $1.5B BTC.

Which currency lost 4/5th of it's value ( 20 k to 4,5 k) till covid started over a couple of years?

That's not "a few basis points"

An absolute massive amount? Just checking my local currency (SEK) against the USD that was in 2014.

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.

You're talking about a span of over multiple years. I just checked BTC and it even dropped 11,51% in 24h.

What is the maximum daily fluctuation you're comfortable with, for any currency?

In stable markets or mismanaged ones?

Currency is a representation of the market it represents. Not from memes of billionaires.

Is that so hard to understand?

> Musk smartly decided he did not want to risk his half a trillion dollar company on random bitcoin fluctuations.

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.

> Musk smartly decided he did not want to risk his half a trillion dollar company on random bitcoin fluctuations.

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.

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