“Salad Hands” is a phrase some people use to describe an investor who sells their Bitcoin (BTC-USD) at the first sign of trouble, often at a loss. An example of its use in a sentence would be: “Elon Musk has salad hands because he sold 75% of Tesla’s (TSLA) bitcoin assets in the second quarter.”
The above sentence is more than an example; happens to be true. During a webcast of Tesla’s quarterly earnings last week, Musk admitted to throwing away about $936 million worth of bitcoin to raise funds due to fears of an economic downturn due to the pandemic in China. The CEO said he sold at a “realized profit” but some people on the internet have serious doubts.
To be fair, Musk added that he was willing to buy more in the future. But for many bitcoin fans and supporters, his decision to sell looks like a betrayal, especially since he continues to hold the meme coin Dogecoin (DOGE-USD), created in 2013 as a joke.
When Tesla first announced a $1.5 billion Bitcoin purchase in February 2021, the crypto community took it as the start of a trend of large corporations and other institutional investors holding digital assets on their balance sheets. Enthusiasm only increased the following month when the electric vehicle (EV) maker announced that it would begin accepting bitcoin as a form of payment.
These plans ran for just over a month before Musk put Bitcoin payments on hold. Cause? He argued that the mining of the asset consumed too much energy and emitted a lot of greenhouse gases.
We now know that Musk’s fears, while valid, were not based on truth. Some may call them FUD, or fear, uncertainty, and doubt.
Musk is right about one thing: Bitcoin mining is energy intensive, there is no doubt about it, and it will become more and more energy intensive per coin as the level of difficulty increases.
He is wrong in saying that bitcoin mining is dirtier than other industries. The truth is that the use of renewable carbon-free energy by institutional-sized miners has been on average higher than in any major country on earth.
Below are the results of the second quarter Bitcoin Mining Council (“BMC”) member survey, co-founded by HIVE Blockchain Technologies (HIVE). According to the data, sustainable energy (wind, solar, hydro, geothermal, etc.) makes up an impressive 66% of the energy mix of BMC members. For the entire global Bitcoin network, this is almost 60%. No G20 country has come close to using this level of renewable energy as a percentage of total energy consumption.
And as many others, including myself, have pointed out, big bitcoin miners are very often the buyers of last resort when it comes to renewable energy. They regularly consume much of the electricity that would otherwise be wasted during off-peak hours. This makes sustainable energy more competitive and will encourage further use of wind and solar.
Dennis Porter, CEO of Satoshi Action Fund, whose mission is to inform policy makers about the virtues of Bitcoin, is taking it one step further. Bitcoin mining, he said in a recent tweet, will one day become “such an important part of the network that if they try to ban it, we will all be left powerless.”
Despite all this, Tesla still has no plans to accept bitcoin as a form of payment again. The only digital asset it accepts is Dogecoin, which has a market capitalization of only about 2% of the size of bitcoin.
However, we continue to love Tesla. The shutdowns in Shanghai were a major problem for the automaker in the second quarter as profits fell from the previous quarter. Now that the plants are back up and running, we expect to see stronger results when the company reports its third quarter.
Like tech stocks and luxury goods stocks, of which Tesla is considered a member, stocks have traded in bearish territory this year due to rising rates, recession fears and supply chain issues.
Tesla’s suspension of bitcoin payments raises questions about the digital asset’s viability as a widely accepted currency and medium of exchange. More businesses and retailers will accept your bitcoin, but so far relatively few transactions are made using cryptocurrencies. According to one source, Bitcoin currently only processes about seven transactions per second, compared to 1,700 for Visa (V) and 5,000 for Mastercard (MA).
But that won’t always be the case, according to the latest research from blockchain infrastructure company Blockware Solutions.
In the June report, the company explores historical trends in the adoption of a number of previously disruptive technologies, including automobiles, radios, the Internet, smartphones and more. Although the rate of adoption in these cases varied, one thing was certain: once adoption reached 10% of the population, growth became “parabolic” as penetration shifted from “early adopters” to “early majority” and finally to “end of majority.” “. majority.”
In short, Blockware predicts that global Bitcoin adoption will exceed 10% by 2030. After that, growth could become parabolic, eventually reaching 80% of the population by the 2050s.
As a reminder, the supply of bitcoins is capped at 21 million. Divide that between the 8 billion people that the world’s population is expected to reach at the end of this year. The above model suggests that owning a single bitcoin and holding onto it for a long time can eventually lead to not only life-changing wealth, but generational wealth.
Disclosure: I/we have a profitable long position in TSLA, HIVE stock either through shareholding, options or other derivatives. I wrote this article myself and it expresses my own opinion. I receive no compensation for this. I have no business relationship with any of the companies listed in this article.
Additional Information: The Nasdaq 100 Index is a basket of the 100 largest and most actively traded US companies listed on the Nasdaq Stock Exchange. The S&P Global Luxury Index includes the top 80 public companies that manufacture or distribute luxury goods or provide luxury services that meet specific investment requirements. Frank Holmes sits on the Board of Directors as Executive Chairman of HIVE and holds stock and options as of September 30, 2021. Effective August 31, 2018, Mr. Holmes has been named Interim Executive Chairman of HIVE while the search for a new CEO is ongoing. business.