Bitcoin (BTC) price fell 17% when Tesla CEO Elon Musk criticized its power consumptionbut he’s already recovering.
On May 13, fresh from its decline to $ 45,600, BTC / USD trades over $ 51,000; reclaimed more than half of the soil lost.
The drama is still playing out, and Cointelegraph is wondering why on a fundamental level Bitcoin is resistant to the actions of a single user, no matter how influential it is.
The proof-of-work doesn’t care
Bitcoin’s Proof-of-Work (PoW) algorithm rewards both miners and investors over time because their years of work make the network stronger.
The longer Bitcoin lasts, The less likely it is that you will succumb to an attack or that your participants will leave the network to get another cryptocurrency.
This is exactly why Bitcoin remains the cryptocurrency of choice for the competition.: As many argue, no altcoin can “make” bitcoin like bitcoin.
However, when it comes to musk, proof-of-work is important for another reason. Just because a prominent investor changes their minds about the merits of Bitcoin and the price falls doesn’t give miners any additional incentive to leave the network or to collect..
This aspect of the “network effect” means that Musk ultimately offers Bitcoin more good than bad advertising. As even the price shows, your words and actions do not change what Bitcoin is or what it is capable of..
Why is proof-of-work so important for Bitcoin? A valid hash (PoW) is the way P2P nodes know that a block is valid without the need for a server or a trusted third party. “, commented on the phenomenon PlanB, the inventor of the Bitcoin stock-to-flow pricing model family.
“Bitcoin is dead without PoW!”
Price development does not matter
Despite its steep decline, according to Musk, Bitcoin’s recent price action speaks more to its resistance to criticism than to its vulnerability.
In fact, BTC / USD barely spent two hours in decline before reversing and holding higher levels. Not only that, but The decline also fits in with the regular price behavior this year and has not even violated long-term price trends.
One particularly important level that shaped the 2020-2021 uptrend was the 21-week exponential moving average (EMA).. Analysts have said that this level would determine the floor price during the dips, as it was held even during the peak of the previous bull run in 2017.
This time, Musk couldn’t lower the meterand the short fuse at $ 45,650 was cleared when it hit the 21EMA on the downstream path.
Bitcoin’s energy consumption doesn’t matter
As always when it comes to Bitcoin, it’s worth zooming out.
Once the dust settles on Musk’s individual energy criticism, the broader “debate” about how green Bitcoin is will continue in his wake. Most of the common allegations have long been discredited for lack of visibility and evidence..
Last week, Michael Saylor, CEO of the large Bitcoin company MicroStrategy, gave a public interview in which he reiterated the lack of merit inherent in claims that Bitcoin is “bad” for the environment.
In response to musk, called Tesla’s decision to stop accepting Bitcoin for payments “ironic”.
“How ironic because No incremental energy is used in a Bitcoin transaction“, wrote On twitter.
“Energy is used to secure the crypto-asset network and the net impact on fossil fuel consumption will be negative over time.”
Expanding the time horizon is therefore important to understand why Bitcoin is worth it. As Saifedean Ammous, author of the popular book “The Bitcoin Standard”, often mentions, A “low time preference” enables a BTC investor to understand that turning down solid funds for reasons such as the environment leads to more wasted energy on shaky alternatives.
This time, Ammous didn’t avoid the bush.
“If you haven’t also swapped out your rocket and battery manufacturing for ‘more sustainable energy’, you’ll look like some big, unsuspecting hypocrite. Here”, tweetedalluding to Musk’s other company, SpaceX.
“The world needs solid money far more than your rockets and government-subsidized electric cars.”