Crypto community turns on Musk as tweets dent bitcoin

Musk had been seen as a proponent for cryptos in February when he announced that Tesla would start accepting payments in bitcoin soon and that the company had invested $1.5 billion in bitcoins.

However, Tesla went back on that promise last week, citing environmental concerns around the use of fossil fuels for generating the electricity needed for crypto mining. The company also said it won’t be selling its own holdings till more environment-friendly means are developed.

“Most of the things Musk has said have been proved wrong,” said a senior executive of one of India’s top crypto exchanges. “More importantly, the problem is that he randomly pushes Dogecoin, a cryptocurrency that was meant as a joke and is against the core idea of cryptocurrencies and affects the entire industry,” he said.

“Elon, block times and block sizes cannot be scaled like that. And as long as Doge is based on proof of work, it would be an environmental disaster. New protocols are necessary to scale. The biggest scientific breakthrough since the bitcoin white paper is the Avalanche protocol,” wrote Emin Gün Sirer, a computer science professor at Cornell University, replying to a tweet by Musk about Dogecoin.

The executive quoted above also noted that Musk’s tweets also give whales, people who hold large amounts of crypto, a chance to take advantage of the market. “Even when I know that what Musk is saying is wrong, I know that most people who don’t understand this market will dump their holdings. So, I (the whale) will dump even more before them, so that I can buy it back when the price is low,” he said.

The public being swayed by the words of people such as Musk is “worrisome” as it shows that there’s a “herd mentality” and that decisions don’t come from a fundamental understanding of the space, said Raghu Mohan, co-founder and CEO, Lumos Labs, an innovation management firm specializing in blockchain accelerator programmes.

All the hype, which includes talk about regulators turning their focus on cryptos, is a sign that we are near the peak of the bull market, Mohan said.