What if Elon Musk is really going to accept Dogecoin at Tesla? The hypothesis that seemed absurd only a while ago is now gaining substance.
This appears to be hinted at by the Tesla CEO’s latest tweets.
Elon Musk has announced that he is working with Dogecoin developers to improve the efficiency of the transaction system, which he describes as potentially promising.
Working with Doge devs to improve system transaction efficiency. Potentially promising.
— Elon Musk (@elonmusk) May 13, 2021
In an earlier tweet, he made it clear that he firmly believes in cryptocurrencies, but that he cannot support something that involves a massive increase in the use of fossil fuels, especially coal.
To be clear, I strongly believe in crypto, but it can’t drive a massive increase in fossil fuel use, especially coal
— Elon Musk (@elonmusk) May 13, 2021
Yesterday, in fact, Elon Musk literally kicked up a fuss by announcing that Tesla would no longer accept bitcoin as a means of payment due to the high consumption of fossil fuels used by the mining process and transactions.
In the same announcement, he said he was also looking for other cryptocurrencies that use less than 1% of the energy consumed by Bitcoin.
On top of that, a survey was carried out a few days ago in which he analyzed how much his followers liked the use of Dogecoin as a means of payment by Tesla.
In short, it seems that Elon Musk has ‘dumped’ Bitcoin in favour of Dogecoin.
Reactions to Elon Musk’s tweets on Dogecoin and Bitcoin
Most people did not like these remarks, for several reasons. First of all, Bitcoin consumes energy and it is well known, but systems are being studied to make this energy consumption sustainable. At the head of such a project are none other than Jack Dorsey’s Square and Cathie Wood’s Ark Investment.
Moreover, as Anthony Pompliano pointed out in his latest letter to investors, Bitcoin mining consumes less energy than gold mining and very little energy when compared to the banking system. Moreover, Pompliano notes, China, where the largest Bitcoin mining farms reside, is progressively converting to renewable energy sources. In fact, according to Pompliano, yesterday’s announcement by Elon Musk could be the first step in a marketing strategy that could see Tesla engaged in the production of Bitcoin mining machines that use renewable energy, although he has no source for this other than his own intuition. Not least because, he claims, Bitcoin is now worth a trillion dollars and Elon Musk is not going to stop it.
Besides, Dogecoin is not any “cleaner” than Bitcoin, it is simply less secure. This is what Ari Paul replied to Musk’s tweet.
…electricity isn’t used for transaction processing. It’s used to secure the network. Doge is PoW meaning it faces the same basic dynamics as Bitcoin. It uses less electricity now because it’s less secure.
— Ari Paul ⛓️ (@AriDavidPaul) May 13, 2021
Ari Paul is the founder of BlockTower Capital and in his tweet, he pointed out that both Bitcoin and Dogecoin work with a Proof of Work algorithm, but Bitcoin uses more energy because it is more secure. Dogecoin uses less energy because it is less secure.
The impact on the market
Needless to say, yesterday’s announcement shook up the price of Bitcoin, which went back to the $47,000 mark yesterday and then recovered. BTC is currently trading at $49,000.
Dogecoin has benefited again from Elon Musk’s words. Although yesterday DOGE had recorded losses that had pushed it down to 37 cents, the latest blessing from Tesla’s CEO is bringing new life to the price of Dogecoin, which today gains 25%, returning above 55 cents. All that remains is to wait for developments involving the relationship with Tesla and Elon Musk.