A tumultuous Bitcoin and crypto market is what followed a public spat between the world's richest man, Elon Musk, and Bitcoin maximalists. This is how it went down.
Tesla CEO and SpaceX founder Elon Musk is in a very explicit and public way going up against Bitcoin maximalists (people who primarily believe that BTC is the only legitimate, decentralized and useful cryptocurrency).
Over recent weeks, it has become abundantly clear that Musk is seeking to either develop Dogecoin (DOGE) into a more energy-efficient, cheaper and faster alternative to Bitcoin, or find another blockchain or coin that meets these requirements.
Several attempts have been made in the past to fork Bitcoin in order to achieve just that. These attempts include Bitcoin Cash (BCH), Litecoin (LTC), DigiByte (DGB) and others, without ever being able to be remotely close to threaten Bitcoin’s hegemony as the dominant force in crypto.
Moreover, there are numerous blockchain projects that today uses DPoS (Delegated Proof of Stake) to achieve significantly lower transaction fees, higher delivery speed and scalability, but then often sacrifices on decentralization by having fewer validators (or nodes). Examples of such chains are Tron and Binance Smart Chain, who both have significant user numbers and high daily transaction count.
Today’s controversy all started following a tweet by Musk that stated that Tesla will not be accepting BTC as a payment method anymore due to what Musk argued was the rapidly increasing use of fossil fuel for Bitcoin mining and transaction validation. He also added that although Tesla will not be selling their BTC holdings, the company is now looking for cryptocurrencies that use less than 1% of Bitcoin’s energy used per transaction.
It is becoming clear that Musk is publically seeking a greener, faster and cheaper alternative to Bitcoin. His explicit criticism of Bitcoin for leaving a too large carbon footprint and not using enough renewable energy sources to mine Bitcoin is quite ironic since over 76% of BTC miners energy reportedly comes from renewable energy.
Another interesting report by Galaxy Digital has shown that both the traditional banking system and the gold industry consume much more energy than the Bitcoin network.
Nonetheless, there are other more green alternatives to Bitcoin’s Proof-of-Work (POW) governance consensus mechanism that limits the number of nodes, and thereby significantly lowers the energy emission of the network.
A thread addressed to Musk posted by a British podcaster and notorious BTC maxi, Peter McCormack, then sparked the fire on May 16. Musk replied the following:
When Musk then faced criticism for his statement that he wants to go all in on DOGE, with specific critique highlighting the fact that Dogecoin is orders of magnitude more centralized in both terms of node count and supply distribution than existing cryptos like Bitcoin, Musk claimed that Bitcoin is “actually highly centralized.“
His reasoning behind the argument was that a handful of big mining companies control the Bitcoin blockchain, and gave the example of when a single coal mine in China’s Xinjiang Province flooded and BTC’s hash rate dropped 35%.
Musk has a fair point when speaking of the sharp drop in hash rate since a large portion of the Bitcoin mining has historically been highly overrepresented in China. Previous numbers put it around 65% on the Chinese mainland of all BTC nodes, although this number has dropped over recent months to be more distributed globally.
That being said, the decentralized nature of Bitcoin is not only about the global distribution of Bitcoin mining rigs, but is also tied to the more decentralized distribution of BTC coins and the lack of a known founder in the anonymous Satoshi Nakamoto. These are issues that DOGE and other BTC forks suffer from today, and will likely continue to be plagued by moving forward.
What happened next is what has had the most significant and negative impact on Bitcoin’s price (it fell down -10% to right above $42k at one point). Musk responded to @CryptoWhale, a controversial account that is also known for essentially having been calling for a bear market since Bitcoin passed $11k.
Musk answered in the affirmative when responding to the tweet: “Bitcoiners are going to slap themselves next quarter when they find out Tesla dumped the rest of their #Bitcoin holdings. With the amount of hate @elonmusk is getting, I wouldn’t blame him…”. Musk simply replied: “Indeed“.
On May 17, when the damage to Bitcoin had already been done as many feared that Tesla had sold or will plan to sell their BTC holdings, Musk tweeted: “To clarify speculation, Tesla has not sold any Bitcoin.“
What Musk’s exact motivations to post this remains unclear. Some suspect market manipulation to buy cheaper BTC. Others believe Tesla will eventually sell BTC if the row between Musk and Bitcoin maxis continues to deepen. Perhaps only Musk himself will know the reasons behind it all when the dust actually settles.
Instead of speculating, the most efficient move is to ignore the noise, keep building decentralized finance products to improve people’s lives, and don’t listen to what they say, but instead watch what they do.
Whatever coin, token or blockchain you love, whether Bitcoin, Doge or any other promising coin or token in the world of crypto, they all have a home in Klever.
Over 500k unique monthly active users globally call Klever app their crypto home too.
At Klever, we’re creating a house of decentralized p2p technology where all blockchain projects can thrive on their own merit.
The Klever team of 80+ developers is today enabling the simplest, fastest, smartest and most empowering way for users worldwide to buy hold, grow and enjoy their crypto in the easiest and most user friendly way that is available on the entire market.
Interestingly, just days after Musk’s energy criticism against Bitcoin, Klever.io received its official certification from Moss.Earth that Klever is now Carbon Neutral Certified company, despite running over 50 blockchain nodes on dozens of blockchains, and with over 100 employees worldwide.
Being a global company with remote staff all over the world, Klever sees it as a duty to ensure it remains carbon neutral and an active part in saving the planet.
Moreover, the upcoming Klever Blockchain set to launch this year will keep to the same values of being carbon neutral and utilizing renewable energy as Klever the company.
The KLV blockchain will also be providing a number of free daily transactions for all users, while facilitating high scalability, community governance and innovative p2p technology that can benefit 7 billion people globally to reclaim their financial freedom, which we view as an inalienable human right.
Director of Communications at Klever