In brief
Tesla CEO Elon Musk praised Bitcoin’s energy-based foundation on Tuesday, suggesting its value comes from the impossibility of faking energy, unlike fiat currency which governments can debase.
This marks a shift from 2021 when Musk criticized Bitcoin’s electricity consumption as “insane,” and Tesla stopped accepting BTC payments over environmental concerns.
Tesla currently holds 11,509 BTC worth about $1.28 billion, down from a peak of 43,200 BTC after selling most holdings in 2022.
Tesla CEO Elon Musk made a rare appearance on Crypto Twitter (aka X) timelines early Tuesday to sing the praises of Bitcoin’s energy consumption. It appears to mark a change of heart years after he criticized the electricity consumption of Bitcoin mining in 2021.
Musk was weighing in on a discussion of AI becoming the “new global arms race,” and reasoning that precious metals and Bitcoin have been soaring because “it’s the ‘debasement’ to fund the AI arms race.”
A debasement trade refers to investors seeking a hedge—like silver, gold, or BTC—against a weakening dollar or other fiat currencies.
Musk agreed, adding, “This is why Bitcoin is based on energy: You can issue fake fiat currency, and every government in history has done so, but it is impossible to fake energy.”
In doing so, he repeated one of the main arguments the Bitcoin community has used to brush off criticism of its energy consumption. The rationale is that while governments can generate more money, Bitcoin only enters circulation when miners expend energy to process new blocks of transactions and earn it as a reward.
Strategy co-founder and Executive Chairman Michael Saylor, one of the most vocal defenders of BTC, then entered the chat. “The laws of nature are superior to the laws of man,” he said.
One of Musk’s earliest mentions of Bitcoin occurred during an interview at the Vanity Fair New Establishment Summit in 2014.
The interviewer segued from talking about PayPal being spun off by then-parent company eBay to asking Musk about Bitcoin.
“I think Bitcoin is probably a good thing, but it is essentially—I think it’s primarily going to be a means of doing illegal transactions,” Musk replied. “That’s not necessarily, entirely bad. Some things maybe shouldn’t be illegal.”
He added: “I don’t own any Bitcoin, by the way.”
A few years later, in 2017, when people began to speculate that Musk might be the pseudonymous Bitcoin creator Satoshi Nakamoto, he denied the rumor. “Not true,” he said on X. “A friend sent me part of a BTC a few years [ago], but I don’t know where it is.”
In early 2021, Tesla began accepting Bitcoin as a payment method. But a few months later, it stopped.
At the time, Musk criticized Bitcoin’s energy consumption in a tweet, saying “Energy usage trend over past few months is insane” alongside a screenshot from Cambridge Bitcoin Electricity Consumption Index. He went on to explain that the electric vehicle maker would accept BTC again if there were “confirmation of reasonable clean energy usage by miners,” adding that reasonable use would mean 50% of all Bitcoin miners.
Meanwhile, Tesla has held Bitcoin since February 2021, according to BitcoinTreasuries. The company’s 11,509 BTC is worth approximately $1.28 billion at current prices. Tesla, which trades on the Nasdaq under the TSLA ticker, used to own more Bitcoin.
At its height, in May 2021, Tesla’s Bitcoin treasury included 43,200 BTC. But the company sold a portion of its holdings the same month it stopped accepting Bitcoin as payment, then sold 75% of its holdings in July 2022, citing “Bitcoin impairment.” At the time, the sale generated roughly $936 million.
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