Elon Musk is definitely interested in digital currencies, but he doesn’t seem to want to understand them. At least I worry that he doesn’t have a deep understanding of Bitcoin (BTC) and decentralized systems in general.
A decentralized system needs to be secure, and Proof-of-Work (PoW) is the solution for Bitcoin to secure its digital asset. The more successful Bitcoin is, the more energy PoW needs to secure the network. In other words, the reason Bitcoin uses so much more electricity than Dogecoin (DOGE), for example, is because BTC is much more secure than DOGE.
Connected: Expert answer: How does Elon Musk affect the crypto space?
The irony of Elon Musk
From a power point of view, BTC uses more energy when mining Bitcoin. This is because Bitcoin occupies a leading position. The irony is that electricity is amorphous – amorphous in the sense that you don’t know where it’s coming from. If you just look at a kilowatt of electricity that is being transmitted to you, you don’t know where it’s coming from unless someone has told you to. You need to track the source of origin, with sometimes the source being green and renewable – like sun, wind, water, or geothermal energy – but sometimes the energy is dirty coal, nuclear and other dirty energy sources that are out there.
The main problem is that energy is itself neutral. Energy doesn’t know where it’s coming from. Energy is just energy – electricity. So the irony is that at Elon Musk, the electric cars he sells at Tesla run on the same energy that is used in the coal-powered BTC mining machines. It is ironic that he criticizes the mining machines for using a lot of energy since the Tesla cars are powered by a lot of energy that comes from all over the world. Basically, if you build and sell 10 million cars, they will use a lot of energy.
Who is right, who is wrong?
The way to really get rid of dirty energy is to stop production at its source: the power plant. This is the only way to get rid of unsustainable energy sources. If Bitcoin mining is necessary, you might think Christmas lights are fine or turning on the air conditioning is fine when in reality, in my opinion, Christmas lights are really unnecessary. I can also argue that air conditioning is unnecessary too. Washing machines and dryers, on the other hand, are necessary, but if you really want to, you can try doing the laundry naturally, by hand, and in the creek behind your house.
These subjective concerns about what is right and wrong, or how to use one’s electricity, come into society. Are we allowing society and the adult adults who live in it to choose how to use electricity? Should there be standards, rules or even laws that regulate this?
If you can use washing machines or air conditioners then why can’t you use bitcoin mining machines? All of these devices waste energy, but these examples are meant to make our lives easier and better.
Whether it is the Paris Agreement or some other major international decree, the goal must be to get rid of dirty energy at its source, in the power plants, as mentioned earlier. To be perfectly fair, a lot of the other industries use a lot of electricity: aluminum, steel, gold, and silver mining – they all use a lot of electricity and use a lot of energy, be it electricity or fossil fuel. In the end, it is a matter of judgment as to which activity is good or bad. The answer here would be entirely subjective: for some, mining gold or processing steel is good, while mining bitcoin is environmentally harmful. Conversely, I would argue that mining bitcoin is good, and processing gold and steel is a waste of money, energy, and resources. After all, it’s subjective.
Why did Musk choose Dogecoin?
Elon Musk likes to be famous and he likes power – a lot of people probably do. It is interesting that he has no influence on Bitcoin as Bitcoin already has a strong following. In other words, he couldn’t take over Bitcoin and set the direction for it because it is already too strong for that.
Check out some of the major cryptocurrencies besides Bitcoin: My brother Charlie Lee is the public face of Litecoin (LTC). Ether (ETH) has a very public founder, Vitalik Buterin. Behind Tether (USDT) is Jean-Louis Van Der Velde. Binance Coin (BNB) has Changpeng Zhao, so on and so on, and they cannot be taken over because there are remarkable people in the driver’s seats, so to speak. Finally, you have Dogecoin, which was created similar to a hobby project, but then the Dogecoin founders seemed to have disappeared and DOGE was not actively nurtured.
Here’s an interesting theory: Elon Musk found out about the Dogecoin tragedy and realized he could take control. He could become the new boss of Dogecoin. (That’s why I think he didn’t choose any other cryptocurrencies as they had their own beloved founders and leaders). With such a strong, famous Dogecoin leader, the price skyrocketed. That’s my theory, but in general I don’t like centralized digital currencies. The fact that you can take over Dogecoin and set the direction on your own is a bad sign for Dogecoin. It’s not very interesting to me.
This article is from an interview with Max Yakubowski With Bobby Lee. It was compressed and edited.
This article does not provide investment advice or recommendations. Every step of investing and trading involves risk, and readers should conduct their own research in making their decision.
The views, thoughts, and opinions expressed herein are those of the authors alone and do not necessarily reflect the views and opinions of Cointelegraph.
Bobby Lee is the former CEO of China’s first cryptocurrency exchange, BTCC, which was founded in 2011. Lee received both his bachelor’s and master’s degrees in computer science from Stanford University and began his engineering career as a software engineer with Yahoo! His current company is Ballet, a hardware wallet for cryptocurrencies designed for mass access and acceptance. Lee is also Vice Chairman of the Board of the Bitcoin Foundation and the brother of Litecoin founder and attorney Charlie Lee.