Why Elon Musk and Tesla turned on Bitcoin

In March 2021 Elon Musk announced that Tesla will accept Bitcoin for payments and a month later Tesla revealed that they bought 1.5 billion Dollar worth of Bitcoin. Another month passed and Tesla and Musk publicly turned their back on Bitcoin. Tesla sold part of its Bitcoin for profit and stopped using it for payments over environmental concerns, while Musk started tweeting memes about Dogecoin and ridiculed Bitcoin supporters and educators.


While from the outside it seemed like a rushed decision or publicity stunt, it is actually a coordinated plan to make profit of the volatile Bitcoin market.


Most of the money Telsa makes does not come from actual car sales, but from emission credits by the government. Basically, the US government is subsidizing Tesla with hundreds of millions worth in emission credits Tesla is then selling to other companies. The second biggest revenue stream for Tesla was Bitcoin and only in third, and miniscule in comparison, the revenues from car sales.


If Tesla would not receive subsidies from the government, it would be barely profitable and could not expand at the rate it currently does. Both Musk and Telsa know this, so they need to venture out for other income streams, and they found one in Bitcoin. With an overall growing acceptance as an ETF and asset around the world, and using Musk’s expose, it was inevitable that Bitcoin would rise in value after the announcements.
After Telsa made a good profit from Bitcoin, it could change its narrative to comfort the public as well as the government, who was starting to raise eyebrows about Tesla supporting a payment system dependent on growing energy consumption. As Tesla is reliant on government subsidies, it can’t risk losing them over Bitcoin.


Now with Bitcoin over 50% down from its peak, the narrative is changing again; Tesla will support Bitcoin once over half of miners use renewable energy to mine Bitcoin. Still invested into Bitcoin, of course Tesla’s interest is the rising price and it is plausible that Tesla bought more Bitcoin during this correction.


The entire drama around Musk, Tesla, Bitcoin, and Dogecoin, was the result of smart decisions made by smart people. The only thing that suffered is Musk’s public image, as he knew from the start that the environmental concerns stemmed from a lack of public understanding of how Bitcoin works, and that Bitcoin mining is actually accelerating a transition to renewables; Miners favor the cheapest source of energy, and for many years the cheapest source of energy has been renewables.


What was seen as curiosity and enthusiasm about how Bitcoin is improving the world for billions of people unbanked and living in authoritarian countries, turned out to be a purely calculated business decision, exactly the opposite of what Elon Musk stands for.

 

Elon Musk announced that Telsa supports Bitcoin: https://twitter.com/elonmusk/status/1374617643446063105


Tesla bought $1.5 billion in bitcoin: https://edition.cnn.com/2021/04/28/investing/tesla-bitcoin/index.html
Tesla suspending Bitcoin: https://twitter.com/elonmusk/status/1392602041025843203


Tesla Made More Money Selling Credits and Bitcoin Than Cars: https://www.autoweek.com/news/green-cars/a36266393/tesla-made-more-money-selling-credits-and-bitcoin-than-cars/


Tesla will use Bitcoin if Miners use more renewables: https://twitter.com/elonmusk/status/1404132183254523905


Elon agrees that Bitcoin incentivizes renewable energy: https://twitter.com/elonmusk/status/1385107878055317509


Educational thread on Bitcoin and Dogecoin: https://twitter.com/elonmusk/status/1393979913624072194