BTC Sheds Market Share; Investors Hunt For ESG-Friendly Cryptos
Bitcoin is bigger than Elon Musk.
Okay, I know you guys are going to think I’m crazy but I saw Elon’s tweet about working with Dogecoin developers to improve system transaction efficiency and I started looking into it… I’m kidding.
You know what sucks more than having 10%+ of your “paper” wealth wiped out overnight? Knowing that I’d have to talk about Bitcoin’s environmental impact again…again.
It all started when Elon Musk said Wednesday on Twitter that Tesla has “suspended vehicle purchases using bitcoin,” out of concern over “rapidly increasing use of fossil fuels for bitcoin mining.” This sent BTC spiralling down over 5% within minutes. I went to bed that night thinking that it couldn’t get much worse but the next morning I started getting texts from family, friends and clients saying something along the lines of “f’ing Musk.” So naturally, I checked Twitter and saw that he added that Bitcoin’s energy usage trend over past few months is “insane” — the market did not like that.
As I write this morning, Bitcoin is back over $50K and alts have nearly fully recovered — some seeing a boost to ATHs — catching the wave of investors betting on Elon’s search for “other cryptocurrencies that use <1% of Bitcoin’s energy/transaction.”
I showed the Bitcoin dominance chart two weeks ago and made the case that #altszn was clearly in full effect but if cycles repeat, we should see Bitcoin find it’s way back to 60%. Since then, BTC’s share of the market has dropped another ~8% and we’re very close to all time lows… It will be interesting to see what happens next.
What we saw at the desk
The week started off a bit slower than usual as BTC traded sideways and our clients pondered on whether ETH was overbought due to it’s tremendous run up.
For the first time, and not surprisingly so, ETH led the way this week and we noticed a pretty even split between buyers and sellers. Wednesday evening and all of Thursday we were incredibly busy with clients rushing in to buy the dip — majority of flows into Bitcoin.
Bitcoin Energy Consumption…not for dummies.
Bitcoin’s environmental impact or carbon footprint has been a leading concern among investors over the past year or so. It seems like every week we speak to investors that have trepidation about Bitcoin because of its environmental impact.
Truly understanding Bitcoin’s energy consumption is a very complex, and multidisciplinary topic. Unfortunately, it would be impossible to wrap it up in a short “For Dummies” type article like I’m accustomed to writing.
To weigh in on this debate one should understand the following concepts:
- Carbon intensity/energy mix
- Transmission loss
- Proof of Work
- Curtailed/stranded energy
- Settlement assurances
- Deferred settlement
- Energy vs electricity production
- Payments vs settlement
Bitcoin energy expert Nic Carter has been holding it down for all of us facing off against the toughest critics since the narrative started. Yesterday, Nic was on Bloomberg to discuss Elon’s Bitcoin comments:
If you’d like to dive in to learn about what Bitcoin’s energy footprint actually looks like — here are a bunch of great resources:
- Coindesk, The Last Word On Bitcoin’s Energy Consumption
- Coindesk, What Bloomberg Gets Wrong About Bitcoin’s Climate Footprint
- Coindesk, The Frustrating, Maddening, All-Consuming Bitcoin Energy Debate
- Medium, Noahbjectivity on Bitcoin Mining
- Medium, On Bitcoin, the Gray Lady Embraces Climate Lysenkoism
- Harvard Business Review, How Much Energy Does Bitcoin Actually Consume?
With folks like Elon Musk and Kevin O’Leary voicing their (subjective?) stance on Bitcoin, miners are taking note. We’ve seen a ton hashrate move from China (known for “dirtier” energy) to North America (where being “ESG friendly” is top of mind) at a rapid pace in the last year — not only is this good for the environment, but it also helps support Bitcoin hashrate decentralization.
Just this morning our friends over at Argo Blockchain and DMG Blockchain announced that they have signed the Crypto Climate Accord to promote the decarbonization of the cryptocurrency industry — we’re certainly trending in the right direction.
The fact is Bitcoin can not only survive but thrive on clean energy and I suspect that as both technologies advance, they will converge… maybe with some help from Mr. Musk?
In case you missed it…
- Study: 46 million Americans now own Bitcoin https://www.newsweek.com/46-million-americans-now-own-bitcoin-crypto-goes-mainstream-1590639
- MoneyGram to allow cash-for-bitcoin trades at 12,000 locations https://www.coindesk.com/moneygram-to-allow-bitcoin-buying-and-selling-across-retail-network
- BlackRock CIO says Bitcoin is durable https://cointelegraph.com/news/bitcoin-is-durable-says-blackrock-s-rick-rieder
- Stan Druckenmiller says US will lose global reserve status https://www.cnbc.com/2021/05/11/stanley-druckenmiller-says-the-fed-is-endangering-the-dollars-global-reserve-status.html
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Satstreet serves private Canadian clients including some of the largest Bitcoin mining operations, institutions, and high net worth individuals. Satstreet has raised initial funding from Round13 Capital and several prominent investors.