Square Follows Tesla’s Suit: Could it be a BTC Price Dump Strategy?

News / 16.05.2021

Earlier this week, the CEO of Tesla said his company would no longer accept payment for cars in Bitcoin, which led to its price crashing and took down other cryptos with it.

A day after, Square also revealed it did not intend to purchase more Bitcoin from its corporate treasuries after losing 20 million dollars on its $220 million investment last quarter in the cryptocurrency.

Mr. Musk said the environmental issues of cryptocurrency were too strong, but he did not exclude support once again if energy was made more sustainable.

Billionaires Dumping Bitcoin Price?

After his announcement, Elon Musk sent cryptocurrency markets to a tailspin. The note marked a turnaround for the electric car manufacturer, which purchased Bitcoin earlier this year, contributing to the crypto rally.

Not only has bitcoin declined sharply, but other currencies as well, like dogecoin, which Mr. Musk has promoted. Of the ten most prominent cryptocurrencies, according to CoinMarketCap, all were dramatically down.

Tesla says that it is looking at other cryptocurrencies that use less than 1% of the energy that bitcoin consumes.

The industry professionals interviewed said that they found it unlikely that Musk had been comfortably unaware of environmental issues about bitcoin mining until now. Sasja Beslik, head of sustainable business growth at Bank J. Safra Sarasin in Zürich, said the step might be to strengthen Tesla’s environmental credentials through the increasing competition in the electric vehicle sector.

Square had recently issued a joint report with Ark Invest, an advocate and fund manager at Bitcoin, to resolve the renewable energy crisis, arguing that Bitcoin could be fundamental in implementing change.

In December, it also started a $10 million campaign to invest in companies promoting renewable energy for the supply chain of Bitcoin.

‘Going for Greener Options’

Musk followed his initial tweet with a chart showing bitcoin’s power consumption the next day. “The energy use pattern has been crazy in recent months,” he wrote. Yet environmentalists have criticized for years and not months bitcoin’s use of energy and its dependence on fossil fuels.

Alex De Vries, the founder of the Digiconomist research platform, said that the use of bitcoin does not correspond, as it stands, to the mission statement of Tesla itself. It isn’t something that occurred suddenly in the last two months in which Tesla chose to embrace Bitcoin first. Fossil fuels such as Chinese coal were already running the network – nothing changed in a short period.

As shown by the data from the University of Cambridge, Bitcoin mining required almost the same amount of energy annually as Egypt in 2019. 

Most of it comes from coal, the dirtiest of all fossil fuels. The output of Chinese miners accounted for approximately 70 percent, the university figures indicate. Many use fossil fuels, and in the rainy summer months, change to renewables such as hydropower.

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Wayne is a Blockchain enthusiast and expert in crypto trading. Currently, he covers trendy issues on digital currencies.