Bitcoin crash coming?

[Wayne 962]

Interesting static over the weekend. Bloomberg article today:

Bitcoin Tumbles After Musk Implies Tesla May Sell Cryptocurrency

Elon Musk continued to whipsaw the price of Bitcoin, briefly sending it to the lowest since February after implying in a Twitter exchange Sunday that Tesla Inc. may sell or has sold its cryptocurrency holdings.

Bitcoin slid below $45,000 for the first time in almost three months after the billionaire owner of the electric-car maker seemed to agree with a Twitter post that said Tesla should divest what at one point was a $1.5 billion stake in the largest cryptocurrency. It traded at $45,270 as of 5:51 p.m. in New York, down about $4,000 from where it ended Friday.

The online commentary was the latest from the mercurial billionaire in a week of public statements that have roiled digital tokens. He lopped nearly $10,000 off the price of Bitcoin in hours last Wednesday after saying Tesla wouldn’t take it for cars. A few days earlier, he hosted “Saturday Night Live” and joked that Dogecoin, a token he had previously promoted, was a “hustle,” denting its price. Days later he tweeted he was working with Doge developers to improve its transaction efficiency.

Musk’s disclosure in early February that Tesla used $1.5 billion of its nearly $20 billion in corporate cash to buy Bitcoin sent the token’s price to record and lent legitimacy to electronic currencies, which have become more of a mainstream asset in recent years despite some skepticism.

His latest dustup with Bitcoin started with a tweet from a person using the handle @CryptoWhale, which said, “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...”

The Tesla chief executive officer responded, “Indeed.”

The twitter account @CryptoWhale, which calls itself a “crypto analyst” in its bio, also publishes a Medium blog on market and crypto trends.

Mr. Whale: 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…

Elon Musk: Indeed

Musk has spent hours Sunday hitting back at several different users on Twitter who criticized his change of stance on Bitcoin last week, a move he said was sparked by environmental concerns over the power demands to process Bitcoin transactions. He said at the time that the company wouldn’t be selling any Bitcoin it holds.

An outspoken supporter of cryptocurrencies with cult-like following on social media, Musk holds immense sway with his market-moving tweets. He has been touting Dogecoin and significantly elevated the profile of the coin, which started as a joke and now ranks the 5th largest by market value.

Dogecoin is down 9.6% in the last 24 hours, trading at 47 cents late Sunday afternoon, according to data from CoinMarketCap.com.

Tesla didn’t immediately respond to an email seeking comment on Musk’s tweet on Sunday.

Musk’s Sunday social-media escapades were the latest chapter in one of the zaniest weeks in a crypto world famous for its wildness. For die hards, the renewed slumps in Bitcoin and other tokens have done nothing to deter crypto enthusiasts who say digital coins could many times their current value if they transform the financial system.

“We’re looking at the long-term and so these blips, they don’t faze us,” Emilie Choi, president and chief operating officer of crypto exchange Coinbase Global Inc., said last week on Bloomberg TV about the wild swings prevalent in the market. “You’re looking for the long-term opportunity and you kind of buckle up and go for it.”

Seat belts were needed by anyone watching the crypto world in the past eight days. Aside from Musk’s antics that sent Doge and Bitcoin on wild rides, a host of other developments pushed around prices.

Tether, the world’s largest stablecoin, disclosed a reserves breakdown that showed a large portion in unspecified commercial paper. Steve Cohen’s Point72 Asset Management announced that it would begin trading cryptocurrencies. And a longstanding critique of the space reared its head again: illicit usage.

Full article: https://www.bloomberg.com/news/articles/2021-05-16/musk-implies-tesla-may-sell-or-has-sold-bitcoin-holdings?sref=OIIo8i2e

-Wayne

[Wayne 962]

Elon quoted this article in his tweet:
https://fortune.com/2021/04/20/bitcoin-mining-coal-china-environment-pollution/amp/

How much Bitcoin comes from dirty coal? A flooded mine in China just spotlighted the issue

The recent accident showed just how fragile, and how environmentally damaging, the Bitcoin supply chain can be.

One of the great Bitcoin unknowns has long been the amounts being produced, or “mined,” in what’s believed to be the top locale for mining the signature cryptocurrency: China’s remote Xinjiang region. We got the answer when an immense coal mine in Xinjiang flooded and shut down over the weekend of April 17–18.

The blackout halted no less than one-third of all of Bitcoin’s global computing power. “We’d seen estimates that high, but this shutdown confirms them,” says Alex de Vries, an economist who runs the website Digiconomist, which tracks Bitcoin’s energy consumption. “We also learned that the area in Xinjiang where all that mining happens is much smaller than previously believed. It underscores China’s dominance in Bitcoin mining, and that dominance raises big security concerns.”

The Xinjiang accident highlights that Bitcoin is a creature of fossil fuels—principally coal, the dirtiest of them all. Its rise is even providing a lifeline for the fading natural-gas industry. In the U.S., miners from New York State to Kentucky are repurposing obsolete facilities to supply the cheap power they cherish. That Bitcoin spreads a carbon footprint bigger than Australia’s, and that the run-up in its price could triple the carbon dioxide it spews, so far doesn’t seem to bother the famous otherwise-green enthusiasts feeding the craze, from Elon Musk to Gwyneth Paltrow.

On April 11, the first news reports emerged that the Xinjiang mine had flooded, trapping 21 workers underground. The miners were rescued, but over the following weekend, authorities reportedly halted production while conducting a safety check, stopping shipments to power plants and causing a blackout. By de Vries’s estimates, the “hash rate,” the pace at which miners run algorithms to compete for fresh releases of Bitcoin, plummeted around 35%. Some in the Bitcoin community blamed the upheaval for hammering the price of the cryptocurrency by 14%, from a record $64,000 on Friday, April 16, to $55,000 on Sunday the 18th.

It’s by no means certain that reports of the accident pounded the wildly volatile coin. But the loss of computing power did trigger a sharp drop in the network’s capacity for handling transactions. Over the weekend, the cost of making a payment with the cryptocurrency or receiving a transfer of Bitcoin jumped from around $16 to $52, according to de Vries.

The incident raises the issue of just how much Bitcoin is being mined in China, and what proportion is produced with electricity that’s generated using coal and other fossil fuels. But a major revelation is the extreme concentration of production in a tiny area. Xinjiang is a vast region of mountains and deserts in China’s far northwest corner that’s one-third larger than the nation of Colombia. The ancient Silk Road linking China to the Middle East wound through these remote lands. The Fengyuan mine is situated in Hutubi (population: 210,000), one of the smaller of Xinjiang’s 61 counties. Aerial pictures show what appears to be a sprawling modern facility cradled in a deep mountain valley. The photos show rail lines for transporting coal to a power station apparently serving Hutubi and nearby counties, but the plant’s name and location aren’t disclosed in news reports.

Prior to the flood, most experts thought that Bitcoin miners operated in many parts of Xinjiang. But the shutdown exposed that almost all, if not 100% of production in the region, is flowing from Hutubi and three neighboring counties powered by coal from the Fengyuan mine.

De Vries notes that more than a dozen other Chinese provinces host Bitcoin miners. It’s impossible to say how much of that additional power outside of Hutubi is created by fossil fuels, he adds. Inner Mongolia has been a popular destination for its cheap coal-fired electricity, accounting for 4% of the world’s Bitcoin production, according to research by Cambridge University. But the province is imposing a ban starting in May in an effort to reach clean-air goals. It’s not clear where the displaced miners will relocate, but it’s probable they’ll be looking for venues that burn fossil fuels and hence charge bargain rates.

In the southern provinces of Hunan and Sichuan, miners link to hydro power. But de Vries estimates that green sources account for a tiny share of the Chinese energy being used to churn out algorithms to capture the next release. “The miners usually dislike renewables because they don’t generate electricity all the time,” he says. “They want to run 24 hours a day. The number of machines is constantly going up. The more machines that are running, the greater the decline in the proportion of Bitcoin a miner can capture.” That means miners tend to earn less Bitcoin over time—so they don’t want to miss grabbing all the tokens they can while the grabbing is good at these fantastic prices. Plus, their machines become obsolete quickly. To get the full benefit, miners need to run their banks of computers around the clock. “Green energy is a terrible match for Bitcoin,” says de Vries.

Overall, de Vries reckons that fossil fuels power around 70% of all Bitcoin mines worldwide, and that coal provides the vast majority of that share. “We now know for sure that one-third of all production runs on pure coal from a tiny place in China,” he says. The quintupling of Bitcoin’s price since last fall, he predicts, is bound to multiply both the overall energy deployed, and the use of oil, natural gas, and especially coal. The annual revenue from mining has swelled from around $5 billion last fall to $23 billion. Right now, operators whose equipment churns 24/7 are feasting, since it’s tough for rivals to butt in. Among the factors blocking new entrants is a severe shortage of semiconductors, limiting production of the ASIC computers that run the network.

Still, that logjam is easing. Rising prices have lifted Bitcoin energy consumption by one-third from a year ago. De Vries predicts that at the current price of around $60,000, annual electricity output needed from mining will almost triple from 102 terawatt hours annually to 284 terawatt hours annually over the next couple of years. Even at current rates, Bitcoin devours the equivalent of 2% as much energy as the U.S. uses, 10% of Russia’s consumption, and 31% of the electricity generated in the U.K. If Bitcoin’s usage jumps as de Vries forecasts, the coin would use three times as much power as his native Netherlands.

Miners are going to unusual places in search of the cheapest power that’s also reliable—and that’s almost always fossil fuels. Since sanctions constrain Iran from exporting oil, Tehran is developing a new market inside the nation’s borders by luring Bitcoin miners with super-low energy costs. By some reports, Iran now accounts for 8% of the world’s Bitcoin production. Kentucky’s rural coal fields are becoming a magnet for miners. Lawmakers in the Bluegrass State are proposing two sets of tax incentives: one for buying and upgrading existing power plants, and another break on electricity purchased from the grid, much of it produced from coal. In February and March, two Bitcoin operators in New York, one in the Finger Lakes and another in Buffalo, announced they were buying old plants to generate electricity in-house.

That authorities in both states favor giving new life to fossil fuels speaks to Bitcoin’s new status. But it will be interesting to see whether the CEOs and celebrity backers who’ve done so much to elevate Bitcoin begin to sour when its carbon footprint multiplies in size. De Vries points to another potential peril. It’s now clear that one-third of all the world’s Bitcoin-mining power masses in a single hotbed of our archrival, China. He fears that if tensions between the U.S. and China escalate, Beijing could use the equipment in Hutubi and the rest of China to paralyze the network, halting all transactions. That shutdown would wreak havoc with the hedge funds that hold Bitcoin and the corporations piling the coins into their treasuries.

Joining the rocks-to-riches Bitcoin journey as a miner or investor has long been the most daring of adventures. Now the flood in Xinjiang is highlighting the phenom’s weakness as a big-time polluter and China’s control over what’s touted as a new bulwark of the U.S. financial system. The Bitcoin journey winds through the jagged landscape of Xinjiang, and recalls the dangers of traveling the old Silk Road.

[ShopCat]

Its best to ignore the tweets of elon, each bull run of crypto has multiple 30% drops along the way. I might buy more this week, we'll see.

[biosurfer1]

Funny that going from $64k to $45k is "tumbling" when a year ago it was less than $10k.

[aigel]

Originally Posted by biosurfer1

Funny that going from $64k to $45k is "tumbling" when a year ago it was less than $10k.

Tell that to the guy who bought at 64 ...

[ShopCat]

Best bet for anyone is to hold if you can afford it. The most conservative estimates put bitcoin number of users at the equivalent of 1997 internet.

[Racerbvd]

[Wayne 962]

Indeed, the optics for Elon in the eye of Bitcoin / crypto fans looks terrible. But, we all know from history that he doesn't have a publicist and doesn't really think carefully about what he says too much in advance.

-Wayne

[ShopCat]

Also, I would bet Tesla did not sell any more than their liquidity test from a few weeks ago. We will know next quarter for sure but Id put money on it. Aren't they still operating their node? .

[john70t]

Explore and take risks with discretionary funds.
But meanwhile hedge and diversify to known factors.

The only true and proven means for at least partial survival. imo

[john70t]

https://en.wikipedia.org/wiki/Money_as_Debt

(I no longer consider Wiki or YouTube as trustworthy)

[McLovin]

Elon Musk coming in with a 100s of billions $$ pump and dump on Bitcoin. Can’t say I saw that coming.

[sc_rufctr]

I remember him complaining about people shorting Tesla...

[Wayne 962]

Originally Posted by ShopCat

Best bet for anyone is to hold if you can afford it. The most conservative estimates put bitcoin number of users at the equivalent of 1997 internet.

Sure, but again, I will voice my opinion. I see Bitcoin as the MySpace or AOL of the Internet. Version 1.0.0 - destined to be replaced by something remarkably better within the distant future?

-Wayne

[dewolf]

No financial expert by any means, but there's one thing I do know. If there is millions to be made, someone will make it work. Might take time, but it will happen. Someone once said that no one would want a computer in their homes. Now we carry them everywhere.

[ShopCat]

Elon tweeted that Tesla have not sold their bitcoin.

Like I said earlier, in terms of users, Bitcoin is at 1997 internet with the most conservative (generous) estimates. It has a long way to go, if it can make it.

Idk if there is something "better" to come along and replace Bitcoin, has anything replaced gold in 1,000 years? Not saying its gold, just that sometimes, things hang around. There are certainly better crypto currencies for tx speed and tx cost that have been around for years, but they sacrifice security. If one could solve the blockchain trilemma (decentralized, secure and scalable) it may become king. So far you have to sacrifice at least one for the others. Bitcoin is ultimately secure and decentralized, but not so scalable.

[sc_rufctr]

To be honest I don't know what to do...

What I don't understand: How can something be worth something if you can't point to it or hold it in your hands?

[ShopCat]

Originally Posted by sc_rufctr

To be honest I don't know what to do...

What I don't understand: How can something be worth something if you can't point to it or hold it in your hands?

Its difficult to grasp because the entire concept, successfully executed, is so new. Until bitcoin, a digitally scarce asset did not exist. SN put the pieces together that solved the problem of copy/paste. Digital currency had been a problem being worked on for 20+ years prior to SN's solution, Bitcoin.

[ShopCat]

While on vacation, I like to browse listings....

https://www.beachhouse.com/337-driftwood-point-road-santa-rosa-beach-florida-32459-p947736.html

Accepting Bitcoin.

[Skillet83]

No secret here that I am a fan of crypto, but well less than 5% of my net. Still having a blast with it, the returns are absolutely amazing, zipped into 6 figures quickly. Bought more yesterday:

Bitcoin BTC
Ethereum ETH
Cardano ADA
Steller Lumens XLM
Uniswap UNI
Internet Computer (new one) ICP
Smartlands SLT

The last one (smartlands) is a fun one. May get wiped out, but upside is huge. Platform is up now, (partially), properties listed, tier 1 exchange announcement within 30 days, wallet by end of month with staking. Go to smartlands.app, click on "news" at bottom. Exciting stuff.