Elon Musk Reverses Stance On Bitcoin, Says ‘It Is Impossible To Fake Energy’

Elon Musk has once again changed his position on Bitcoin, this time coming out in support of the cryptocurrency he once criticised. In a post on X (formerly Twitter) on Oct. 14, the Tesla and SpaceX CEO praised Bitcoin’s “energy-based” foundation, calling it the key to its value. This is a stark contrast to his 2021 stance when he denounced its high electricity consumption.

Musk’s comment came in response to a user who claimed that governments are funding an “artificial intelligence arms race” by printing money, which has driven the prices of gold, silver and Bitcoin to record highs. The user added, “But you can’t print energy.”

Agreeing with the statement, Musk replied, “True. That is why Bitcoin is based on energy: you can issue fake fiat currency, and every government in history has done so, but it is impossible to fake energy.”

Musk’s latest endorsement marks yet another twist in his on-and-off relationship with Bitcoin. In early 2021, Tesla briefly accepted Bitcoin as payment for its electric vehicles, a move that sent the cryptocurrency’s price soaring. 

Less than two months after the announcement, Musk posted on social media in May 2021 that Tesla would stop accepting Bitcoin as a payment method, citing environmental concerns and Bitcoin’s high energy consumption as the reasons behind the decision.

The reversal triggered a massive sell-off in the crypto market, wiping out billions in value. 

Later, in July 2022, Tesla dumped 75% of its Bitcoin holdings a year after touting its long-term potential. “As of the end of Q2, we have converted approximately 75% of our Bitcoin purchases into fiat currency,” Tesla said in its second-quarter earnings statement that year, according to a report in CNBC.

Despite this, data from on-chain analytics firm Arkham Intelligence shows that the company still holds 11,509 BTC, valued at around $1.3 billion.

Earlier this year, Musk said that his newly launched “America Party” would embrace Bitcoin, suggesting his renewed interest in the cryptocurrency’s potential.

Responding to a post on X questioning whether the America Party would support cryptocurrency, Musk offered a concise reply that hinted at his scepticism towards the US dollar. When asked, “Will America Party embrace Bitcoin?”, Musk responded, “Fiat is hopeless, so yes.”

Bitcoin operates on a proof-of-work system, where miners use powerful computers to solve complex mathematical problems. This process, known as mining, consumes vast amounts of electricity but is essential for securing the network and introducing new Bitcoin into circulation.