10 ms·

Okay, here's my Big Brain, 4D Chess take: Elon Musk wanted to adopt Bitcoin, but he knew there was this big problem with energy consumption. It's bad for his b

Okay, here's my Big Brain, 4D Chess take: Elon Musk wanted to adopt Bitcoin, but he knew there was this big problem with energy consumption. It's bad for his brand, and perhaps goes against his own ethics. Could he say "hey, get the energy consumption down and I'll go all-in with Tesla"? People wouldn't think much of it. Better option: Buy a huge stake in Bitcoin, announce that he'll be accepting bitcoin at Tesla, get people really excited, heat up the market, and then pull it out from under them. Now all of the big stakeholders in Bitcoin have a clear, almost measurable incentive to clean up bitcoin's act. If Bitcoin adopts proof-of-stake or whatever needs to happen to bring down energy consumption, people will look back and thank Elon Musk for it.

latchkey 5y ago
https://www.bloomberg.com/opinion/articles/2021-05-13/elon-musk-got-bored-of-bitcoin https://www.bloomberg.com/opinion/articles/2021-05-13/elon-m... Surely by next week he’ll be tweeting, like, “we are building a giant battery in the desert to mine Bitcoin, Bitcoin is good again, you can use it to pay for Teslas,” and the price will shoot back up, and I’ll once again hit the button that auto-generates this column.
- rjbwork 5y ago
  Lol. I freaking love Money Stuff. Levine writes so clearly and humorously on so many modern finance topics.
- hef19898 5y ago
  There was a time Porsche made more profits than revenue, back before the 2008 crash. Mainly due to financial shenanigans, primarily with VW. Came crashing down in 2008 with the failed acquisition of VW, that ended with a merger of kinds. Maybe Tesla ends up in a similar situation, making the majority of it profits from Bitcoin. Wouldn't be to bad for them short term, it would mud the waters regarding Tesla even more so.
delaaxe 5y ago
It's not that complicated: https://arstechnica.com/tech-policy/2021/05/private-equity-firm-revives-zombie-fossil-fuel-power-plant-to-mine-bitcoin/ https://arstechnica.com/tech-policy/2021/05/private-equity-f...
- Sparkle-san 5y ago
  I feel like the acceptable level of due diligence that should have necessary for Tesla to move in the Bitcoin direction should have easily accounted for a possibility like this.
vb6sp6 5y ago
No 4d chess needed. It feels like this was a simple pump and dump.
- postmeta 5y ago
  Did they sell their remaining 1 billion in bitcoin? I saw they sold 100m a few months ago.
worik 5y ago
It is not possible to clean up bitcoin. Even if it moved entirely to renewable energy it would still be a massive opportunity cost. There are productive uses that energy could be put to. Bitcoin is not productive. Using gigawatts to process a few transactions a second, when existing financial frameworks can process millions of transactions a seconds at a fraction of the energy input means that bitcoin is always a massive waste.
- fastball 5y ago
  Layer 2 scaling solutions?
  - 988747 5y ago
    They are like Yeti: everybody talks about them, but no one has actually seen them.
    - anonporridge 5y ago
      People are using lightning right now. Your ignorance of it isn't proof of absence.
- nprz 5y ago
  There is utility in the bitcoin network that is not found in existing financial systems (censorship-resistant, seizure-resistant, borderless, and pseudonymous). And If you are thinking about the energy consumption of btc on a per transaction basis you are misunderstanding that the btc network should be thought of as a settlement layer, rather than a payment layer. > Bitcoin is therefore best understood as a high-integrity utility-scale settlement network, similar to Fedwire [...] No surprise that like other real-time gross settlement systems, Bitcoin is a suitable base upon which other payments networks can be built. These are numerous, but they include off-chain transactions at exchanges, near-chain solutions like Lightning, sidechains with new trust models like Liquid and Rootstock, and smart contract platforms like Blockstack that rely on Bitcoin’s security.[0] The myopic focus placed on the bitcoin networks energy consumption has always seemed absurd to me. Considering all the plastic junk manufactured in China, shipped on giant container ships all across the globe, emitting vast amounts of carbon, only to be thrown away a year later. To me, this alternative monetary systems provides far more utility to humanity than some plastic funko pop figurine. But the latter slips under the radar and the former attracts huge amounts of criticism. It's almost as if there is some concerted effort tarnish the public opinion of bitcoin. [0] https://www.coindesk.com/frustrating-maddening-all-consuming-bitcoin-energy-debate https://www.coindesk.com/frustrating-maddening-all-consuming...
nickik 5y ago
Whenever people start talking about Big Brain 4D Chess I think, probably not it. Elon is pretty busy, before he got into space flight, he new very little about it. Some people at the time said as much. However 2 years later the same person said he was literally an expert on many things and had learned an insane amount. This seems more like Elon became convinced of the potential of crypto currency in general, told Tesla to look into it, if it is a viable cash storage and if it is, logically using it for payments make sense. Then they based on their internal team for evaluation of environment they saw that their entrance in the market caused a massive spike and released if this continues and they continue to drive people in that market it would be damaging for the mission. It reasonable that they didn't understand how large the increase in power consumption was and how large it would be if it continued to be adopted. So rather then continue to drive in that direction they pulled the plug. I know, its not a crazy big brain story, but its actually how most flawed process happen.
- orblivion 5y ago
  I forgot to consider that he caused the spike in energy usage in the first place. I think this makes more sense.
  - orblivion 5y ago
    Still, the outcome may be about the same. The incentives I described are still there and staring them in the face.
xur17 5y ago
Some interesting timing [0]. [0] https://www.reuters.com/business/sustainable-business/exclusive-tesla-seeks-entry-into-us-renewable-fuel-credit-market-sources-2021-05-12/ https://www.reuters.com/business/sustainable-business/exclus...
Siira 5y ago
The energy consumption is the only security mechanism Bitcoin has. It's impossible to drive it down. PoS would be a completely different fork, and it's not clear how secure/censorship-proof it would be.
- rodiger 5y ago
  Any protocol change is, by definition, a fork. If everyone says the new PoS Bitcoin is the real Bitcoin, then it is so.
  - kofddfjdfdfdff 5y ago
    But what would be incentives to using a PoS Bitcoin fork, as opposed to starting over with a fresh altcoin?
    - Sargos 5y ago
      You keep the existing network effects which are massive.
antpls 5y ago
I like to believe to that theory as well. But there is probably a simpler explanation : crypto is still experimental and Elon is pragmatic as new informations arrive. Where Bitcoin is the graal for some people, for Tesla it was only another real scale experiment about a payment method.
danans 5y ago
I don't think there's any 4D chess. With most of his stuff, he's just selling a story. Lately, that story (and the products to match) have pivoted from eco-luxury (Roadster, Model S/3/Y) to a story targeting the well-off eco-prepper crowd. Switch out the underlying technologies and the customer demographics and it would would be offroad pickups instead of Cybertrucks, propane generators instead of Powerwalls, suitcases of unmarked bills instead of crypto, flamethrowers instead of guns (ok, I'm stretching the analogy, but you get it). And just like with the lower tech equivalents, the likelihood/frequency that most of his customers will use the products to anywhere near their full potential is close to zero, because most still live well within the safety margins of civilization. And whether he actually believes in any of the story himself is sort of besides the point, because there are enough people that fit the above description who will eat up his products and the story that comes with them. This is not to diminish how much he's done to accelerate EV adoption. He realized that most people aren't really onboard with using EVs for the sake of the environment, and that you have to target people's selfish needs to move a product, not their prosocial feelings. Remember that Nissan Leaf was the first mass market practical EV, before the Model S, but for a whole lot of people it didn't do much for their mojo.
jl2718 5y ago
BTC would not survive a PoS fork. The threat model requires a consensus mechanism to include a huge network of hyper vigilant greedy actors that may enter or leave at will. For a linear utxo blockchain, there’s nothing but PoW with those properties.

latchkey 5y ago

https://www.bloomberg.com/opinion/articles/2021-05-13/elon-musk-got-bored-of-bitcoin https://www.bloomberg.com/opinion/articles/2021-05-13/elon-m... Surely by next week he’ll be tweeting, like, “we are building a giant battery in the desert to mine Bitcoin, Bitcoin is good again, you can use it to pay for Teslas,” and the price will shoot back up, and I’ll once again hit the button that auto-generates this column.

rjbwork 5y ago
Lol. I freaking love Money Stuff. Levine writes so clearly and humorously on so many modern finance topics.
hef19898 5y ago
There was a time Porsche made more profits than revenue, back before the 2008 crash. Mainly due to financial shenanigans, primarily with VW. Came crashing down in 2008 with the failed acquisition of VW, that ended with a merger of kinds. Maybe Tesla ends up in a similar situation, making the majority of it profits from Bitcoin. Wouldn't be to bad for them short term, it would mud the waters regarding Tesla even more so.

delaaxe 5y ago

It's not that complicated: https://arstechnica.com/tech-policy/2021/05/private-equity-firm-revives-zombie-fossil-fuel-power-plant-to-mine-bitcoin/ https://arstechnica.com/tech-policy/2021/05/private-equity-f...

Sparkle-san 5y ago
I feel like the acceptable level of due diligence that should have necessary for Tesla to move in the Bitcoin direction should have easily accounted for a possibility like this.

vb6sp6 5y ago

No 4d chess needed. It feels like this was a simple pump and dump.

postmeta 5y ago
Did they sell their remaining 1 billion in bitcoin? I saw they sold 100m a few months ago.

worik 5y ago

It is not possible to clean up bitcoin. Even if it moved entirely to renewable energy it would still be a massive opportunity cost. There are productive uses that energy could be put to. Bitcoin is not productive. Using gigawatts to process a few transactions a second, when existing financial frameworks can process millions of transactions a seconds at a fraction of the energy input means that bitcoin is always a massive waste.

fastball 5y ago
Layer 2 scaling solutions?
- 988747 5y ago
  They are like Yeti: everybody talks about them, but no one has actually seen them.
  - anonporridge 5y ago
    People are using lightning right now. Your ignorance of it isn't proof of absence.
nprz 5y ago
There is utility in the bitcoin network that is not found in existing financial systems (censorship-resistant, seizure-resistant, borderless, and pseudonymous). And If you are thinking about the energy consumption of btc on a per transaction basis you are misunderstanding that the btc network should be thought of as a settlement layer, rather than a payment layer. > Bitcoin is therefore best understood as a high-integrity utility-scale settlement network, similar to Fedwire [...] No surprise that like other real-time gross settlement systems, Bitcoin is a suitable base upon which other payments networks can be built. These are numerous, but they include off-chain transactions at exchanges, near-chain solutions like Lightning, sidechains with new trust models like Liquid and Rootstock, and smart contract platforms like Blockstack that rely on Bitcoin’s security.[0] The myopic focus placed on the bitcoin networks energy consumption has always seemed absurd to me. Considering all the plastic junk manufactured in China, shipped on giant container ships all across the globe, emitting vast amounts of carbon, only to be thrown away a year later. To me, this alternative monetary systems provides far more utility to humanity than some plastic funko pop figurine. But the latter slips under the radar and the former attracts huge amounts of criticism. It's almost as if there is some concerted effort tarnish the public opinion of bitcoin. [0] https://www.coindesk.com/frustrating-maddening-all-consuming-bitcoin-energy-debate https://www.coindesk.com/frustrating-maddening-all-consuming...

nickik 5y ago

Whenever people start talking about Big Brain 4D Chess I think, probably not it. Elon is pretty busy, before he got into space flight, he new very little about it. Some people at the time said as much. However 2 years later the same person said he was literally an expert on many things and had learned an insane amount. This seems more like Elon became convinced of the potential of crypto currency in general, told Tesla to look into it, if it is a viable cash storage and if it is, logically using it for payments make sense. Then they based on their internal team for evaluation of environment they saw that their entrance in the market caused a massive spike and released if this continues and they continue to drive people in that market it would be damaging for the mission. It reasonable that they didn't understand how large the increase in power consumption was and how large it would be if it continued to be adopted. So rather then continue to drive in that direction they pulled the plug. I know, its not a crazy big brain story, but its actually how most flawed process happen.

orblivion 5y ago
I forgot to consider that he caused the spike in energy usage in the first place. I think this makes more sense.
- orblivion 5y ago
  Still, the outcome may be about the same. The incentives I described are still there and staring them in the face.

xur17 5y ago

Some interesting timing [0]. [0] https://www.reuters.com/business/sustainable-business/exclusive-tesla-seeks-entry-into-us-renewable-fuel-credit-market-sources-2021-05-12/ https://www.reuters.com/business/sustainable-business/exclus...

Siira 5y ago

The energy consumption is the only security mechanism Bitcoin has. It's impossible to drive it down. PoS would be a completely different fork, and it's not clear how secure/censorship-proof it would be.

rodiger 5y ago
Any protocol change is, by definition, a fork. If everyone says the new PoS Bitcoin is the real Bitcoin, then it is so.
- kofddfjdfdfdff 5y ago
  But what would be incentives to using a PoS Bitcoin fork, as opposed to starting over with a fresh altcoin?
  - Sargos 5y ago
    You keep the existing network effects which are massive.

antpls 5y ago

I like to believe to that theory as well. But there is probably a simpler explanation : crypto is still experimental and Elon is pragmatic as new informations arrive. Where Bitcoin is the graal for some people, for Tesla it was only another real scale experiment about a payment method.

danans 5y ago

I don't think there's any 4D chess. With most of his stuff, he's just selling a story. Lately, that story (and the products to match) have pivoted from eco-luxury (Roadster, Model S/3/Y) to a story targeting the well-off eco-prepper crowd. Switch out the underlying technologies and the customer demographics and it would would be offroad pickups instead of Cybertrucks, propane generators instead of Powerwalls, suitcases of unmarked bills instead of crypto, flamethrowers instead of guns (ok, I'm stretching the analogy, but you get it). And just like with the lower tech equivalents, the likelihood/frequency that most of his customers will use the products to anywhere near their full potential is close to zero, because most still live well within the safety margins of civilization. And whether he actually believes in any of the story himself is sort of besides the point, because there are enough people that fit the above description who will eat up his products and the story that comes with them. This is not to diminish how much he's done to accelerate EV adoption. He realized that most people aren't really onboard with using EVs for the sake of the environment, and that you have to target people's selfish needs to move a product, not their prosocial feelings. Remember that Nissan Leaf was the first mass market practical EV, before the Model S, but for a whole lot of people it didn't do much for their mojo.

jl2718 5y ago

BTC would not survive a PoS fork. The threat model requires a consensus mechanism to include a huge network of hyper vigilant greedy actors that may enter or leave at will. For a linear utxo blockchain, there’s nothing but PoW with those properties.