The price of Bitcoin and other cryptocurrencies jumped on Monday after Tesla (TSLA) CEO Elon Musk tweeted about a “potentially promising” conversation he said he had with Bitcoin miners about renewable energy.
The remarks — the latest from Musk to send crypto prices soaring or reeling — came as traders during the day processed support from other big financial names. Meanwhile, China showed few signs of relenting on its crackdown on cryptocurrencies.
“Spoke with North American Bitcoin miners,” Musk said, referring to the people who create new Bitcoins. “They committed to publish current & planned renewable usage & to ask miners WW to do so. Potentially promising.”
Minutes after Musk’s tweet, Michael Saylor, the CEO of business analytics platform Microstrategy (MRST), also tweeted that he hosted a meeting yesterday between Musk and “leading Bitcoin miners in North America.” He said the miners agreed to form the Bitcoin Mining Council to “promote energy usage transparency & accelerate sustainability initiatives worldwide.”
Executives from Argo Blockchain, Blockcap, Marathon Digital Holdings (MARA) and Riot Blockchain (RIOT) were among those present, said Saylor, whose own company has loaded up on Bitcoin over the past year.
The companies, he said, “decided to establish an organization to standardize energy reporting, pursue industry ESG goals, & educate+grow the marketplace.”
Musk made the announcement after saying earlier in the month that Tesla had suspended the use of Bitcoin to purchase vehicles, citing the amount of energy the cryptocurrency consumes. However, he has said that cryptocurrency, overall, still has potential.
Digiconomist has estimated that the annual carbon footprint and electrical-energy that Bitcoin chews through is equal to some smaller nations, as servers around the globe work to clear transactions. Most of the world’s Bitcoin mining is done in China.
Bitcoin Vs. Bonds
Earlier in the day, Ray Dalio, founder of top hedge fund Bridgewater Associates, said he’d “rather have Bitcoin than a bond” in an inflationary environment, Coindesk said.
He made the remark in a prerecorded interview aired Monday at the Consensus by Coindesk conference.
Additionally, he said the value of the dollar was likely to fall. And he said in the interview that “I have some Bitcoin.”
In January, Dalio called Bitcoin “one hell of an invention.” But last year he expressed concerns about volatility and the possibility for a government crackdown on cryptocurrencies.
‘Serious Crackdown’ Hits Price of Bitcoin
Dalio’s remarks followed a massive drop in the price of Bitcoin this month, after the cryptocurrency took off last year. Wider adoption from big investors and corporations, along with concerns about the value of traditional currencies during the coronavirus pandemic, led to a flight into Bitcoin.
In addition to Musk’s earlier tweets this month, China has slapped new bans on crypto-related services, amid concerns about Bitcoin’s volatility and energy use.
“It’s become clear Beijing’s stance isn’t a one-off warning but the beginnings of a serious attempt to limit the decentralized power of cryptocurrencies,” analyst Susannah Streeter said. Streeter, senior investment and markets analyst at Hargreaves Lansdown, made the comment in an emailed report.
Meanwhile Huobi, a crypto exchange, stopped miner hosting services in China, Coindesk reported on Sunday. It said it suspended services related to its Huobi Mall for new users in mainland China. Other services were also halted.
“Due to recent dynamic changes in the market, in order to protect the interests of investors, a portion of services such as futures contracts, ETP, or other leveraged investment products are temporarily unavailable to new users from a few specified countries and regions,” Huobi said in a statement.
The statement didn’t say which areas are affected. Meanwhile, OKEx, another exchange, said its OKB token cannot be traded with Chinese yuan, according to the Wall Street Journal.
Price of Bitcoin Rallies
Still, the price of Bitcoin rallied 16% to $39,077 Monday. Ethereum, another cryptocurrency, jumped 26% to $2,603.
Microstrategy fell 0.9% after hours. Tesla was largely unchanged.
Some market watchers also attributed the rebound on Monday to investors buying at a discount and tweets from Musk over the weekend expressing support for crypto.
Streeter said that “despite the roller-coaster ride, some crypto fans who have buckled up see the recent falls as an opportunity to buy into currencies like Bitcoin at a cheaper price.”
But when asked what Musk thought about people who were angry at him over his recent comments about cryptocurrencies, Musk said he still liked the digital assets.
“The true battle is between fiat & crypto,” he said. “On balance, I support the latter.”
“Following that tweet, crypto markets stabilized somewhat after China stepped up its efforts to crack down on Bitcoin mining and trading,” Fawad Razaqzada, a market analyst with ThinkMarkets, said in an email.
Fed Steps Up
Elsewhere at the Coindesk conference, Federal Reserve Gov. Lael Brainard reiterated that the central bank was “stepping up its research and public engagement” on central bank digital currencies.
“Four developments — the growing role of digital private money, the migration to digital payments, plans for the use of foreign CBDCs in cross-border payments, and concerns about financial exclusion — are sharpening the focus on CBDCs,” she said in prepared remarks.
She said the coronavirus pandemic highlighted the difficulties surrounding financial access. Particularly for unbanked or underbanked people. She said it took “weeks to distribute relief payments in the form of prepaid debit cards and checks to households who did not have up-to-date bank account information with the Internal Revenue Service.”
“The challenges of getting relief payments to these households highlighted the benefits of delivering payments more quickly, cheaply, and seamlessly through digital means,” she said.
The Federal Reserve on Thursday said that it will publish a research paper this summer that explores the development of its own central bank digital currency.
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