12 February 2021

Bloomberg: “The Tesla-Bitcoin Singularity is Here at Last”

The move raises the usual questions about Tesla’s governance. Apart from the speculative nature of it, the fact that CEO Elon Musk has been tweeting heavily about cryptocurrencies of late should ring alarm bells in whatever passes for Tesla’s boardroom. Not necessarily because anything untoward has happened, but it’s fair to say Musk has some history to live down when it comes to the tweeting. Giving authorities any reason to scrutinize Tesla is inadvisable. One has to wonder what a regulator might make of this tweet from just a month before the “updated” investment policy was approved, for example:

One way in which the foray into crypto certainly helped on Monday was taking the spotlight off some less exciting news. Tesla was recently summoned by Chinese regulators to answer complaints about quality and safety issues with its cars. China is crucial for Tesla because, as the 10-K also revealed, revenue in this growth company’s home market in the fourth quarter was still lower than two years previously.

Liam Denning

Elon Musk in a nutshell: funding a $100 million innovation contest to identify ways to remove and store carbon dioxide, while investing $1.5 billion in Bitcoin, a pseudo-currency with a massive appetite for electricity. Hypocrisy? Greed? Market manipulation? I’d say all of the above!

I have slowly come to the conclusion that, despite selfless proclamations about saving the environment and putting humanity on Mars, his actual motive is simply… becoming a mogul! After all, electric cars are only as clean as their energy source; if they are powered by ‘dirty’ electricity from burning fossil fuels, this just shifts the source of pollution out of cities, not actually reducing overall carbon dioxide emissions. His hasty business tactics, rushing to scale manufacturing and control key markets such as electric vehicles and satellite launches, are reminiscent of Silicon Valley growth strategies: build a quasi-monopoly, obstruct competition and extract revenues by charging for access to the platform.

This chart shows shares of Tesla versus Bitcoin. I love spurious correlation as much as the next person, but what if it’s not so spurious?

Update: as a follow-up, according to an analyst’s estimation, Tesla is expected to make more from its Bitcoin investments than profits from selling its electric cars in all of 2020. Of course, these estimated figures are subject to the wild fluctuations of Bitcoin price, but it reinforces the conclusion that Musk is more interested in short-term profits than long-term environmental benefits.

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