For some reason, people keep acting like Elon Musk is acting crazy with his obsession with cryptocurrency… like he’s just fooling around. That’s one possible explanation, but it doesn’t really comport with the fact that he occasionally holds the title of richest person in the freakin’ world.
What if Elon Musk isn’t crazy, but is actually, like, really smart and just thinking strategically? Hear me out.
Maybe he did his research and settled on Bitcoin and Dogecoin for practical reasons?
Huh? But what reason could that be? Well, let’s think about what we know about Elon’s station in life.
Elon Musk owns the Gigafactory. The Gigafactory is estimated to one day become the largest building in the world. It could be a net zero facility powered entirely by renewable energy, producing more batteries than anyplace in the world. As of 2018, it claimed an annualized battery production of 20 GWh, and it’s surely grown since then. In their most recent 10-Q they claimed to have deployed 445 GWh worth of energy storage products. Not bad!
What might be of interest to somebody who can singlehandedly redirect the flow of more electrons on planet earth than any other human?
Bitcoin mining is currently estimated to consume 110 TWh per year. With a block reward of 6.25 BTC, a bit over 300,000 BTC are mined each year. Doing some back of the envelope math, this means that ~0.4 GWh worth of energy competes to produce each BTC. Might this be of interest to the man who can make electrons dance on command?
I’m not saying Tesla’s going into the mining game, in fact I’d bet against them moving into directly mining at any serious scale. But do you think a man capable of harnessing so much energy could find a base of customers among energy hungry miners? Only if he was a skilled entrepreneur…
In Q1 Tesla 2021 reported half a billion in revenue from their “Energy Generation and Storage Sales” wing of the company. The total value of all the BTC mined in a quarter, at recent price of $55K, is $4.1B, about 8x Tesla’s current revenue. Possibly a reasonably sized growth market, but only if he could find product-market fit… or maybe he’s just off his rocker.
Notice Elon doesn’t care about Ethereum. Maybe it’s just because they don’t have spicy enough memes? Or maybe Ethereum is cutting out the miners so there’s less opportunity. 🤔
Instead he takes interest in Dogecoin, yet another coin that requires energy to mine. 🤔🤔🤔
Dogecoin is very similar to Bitcoin, but different in one key regard. Where Bitcoin uses the SHA-256 algorithm that is easily dominated by FPGA and ASIC miners. Dogecoin uses the scrypt algorithm that requires a bit more memory, making it a bit more democratic and tougher to dominate by ASICs. Why might this be of interest to somebody like Elon?
Just spitballing here. Again… I’m not predicting any of this, just imagining what sort of power could the Dogefather wield if he wanted?
Tesla has sold about 500K Teslas, essentially iPads on wheels with maybe ~32GB of RAM? Each night their users keep them plugged in to their existing power supply. What could he do with such a mesh network?
One of the top Dogecoin mining pools, #PROHASHING, generates about 2.9 TH/s on scrypt and currently has about 11,088 active miners at the moment.
Hypothetically, if Elon released a Tesla app that allowed his personality cult to optionally turn their car into a Dogecoin miner, what percent of his loyal personality cult many would do it? Could Elon create a competitive mining pool overnight with this one simple action?
Why Dogecoin instead of Litecoin, which is also scrypt-based? They both had roughly equivalent mining power thrown at them for the past few years.
My hunch is Elon felt the meme-friendliness of Dogecoin would be easier to pump to his fanbase, a group that got excited when he released a fart app. Also, it happens to be the sort of joke coin that might not attract much serious scrutiny for the oft-investigated man. So he can both spin it as a joke and still pump it to amazing heights.
Notice that he only bothers to shill Dogecoin, and not Bitcoin? Perhaps because there’s only a viable business-to-consumer opportunity in Dogecoin. The economics of Bitcoin mining don’t make sense in a Tesla… the SHA-256 Bitcoin mining needs special hardware. So maybe his shilling is actually a calculated move on his part? Or maybe he’s just nuts? You can decide.
Again, none of this is necessarily likely to happen. Just an interesting thought experiment to demonstrate that if Elon so desired, he has assembled the chess pieces into a position that gives him unique power.
All in public while everybody was busy laughing at him and selling their $TSLA stock.
At least we can all get much joy from DOGE memes :)
For more info, check our live market data at https://curvemarketcap.com/ or our subscribe to our daily newsletter at https://curve.substack.com/. Nothing in our newsletter can be construed as financial advice. Author is a $CRV maximalist, owns no $TSLA, $sTSLA, $mTSLA or any other such synthetic.