For the Bitcoin faithful, February 8 may be remembered as a holy day—and for the Securities and Exchange Commission, it may be another reason to investigate the professional troll and Tesla CEO Elon Musk. In a Monday morning SEC filing, Tesla revealed that it had purchased $1.5 billion worth of Bitcoin, adding itself to a roster of companies and investment funds that have poured billions into the preeminent cryptocurrency in the last year. Tesla said it would also start accepting Bitcoin as payment for its cars.
The news caused Bitcoin’s price to shoot up about 13 percent in early trading, but more than any short-term profits, it represents the culmination of a months-long campaign by Bitcoiners to get Musk to embrace Bitcoin and its attendant worldview, a messianic vision of a decentralized currency network leading to economic emancipation, with consumers free of the shackles of politics and central banks. Whether Musk actually believes Bitcoiner rhetoric—or, like any troll, is merely doing it for the lulz—is less important than what it represents: one of tech’s most celebrated companies making a huge commitment to its most controversial commodity.
The Bitcoin buy is also a clear indictment of Tesla’s, and Musk’s, image as an environmentally conscious innovator. There are few speculative assets more harmful to the climate than Bitcoin, which consumes a colossal amount of electricity. In an added irony, the SEC filing showed that Tesla had continued its long-standing practice of selling carbon credits. In 2020, Tesla sold about $1.58 billion worth of these credits—almost exactly the value of the Bitcoin purchased. It appears that to bulk up its paltry balance sheet (Tesla is a perennial money-loser), the company sold environmental credits and then funneled the proceeds into the digital equivalent of burning coal.
Despite the proselytizing of its adherents, Bitcoin’s value is highly variable and dependent on public opinion. For months, a kind of informal influence campaign has been underway, in which prominent investors and tech executives have embraced Bitcoin—at times as a form of digital gold, in other cases as an alternative to the U.S. dollar. Led by Jack Dorsey, the CEO of Twitter and Square, and Michael Saylor, the MicroStrategy CEO who recently led a conference for companies interested in buying large tranches of Bitcoin—and boosted by lesser-known personalities like the Winklevoss twins—investors have been talking up Bitcoin with an enthusiasm to match its rising cost. In late January, when Musk added #bitcoin to his Twitter bio and then tweeted, “In retrospect, it was inevitable,” the price of Bitcoin increased by 17 percent. (Musk has joked that he wouldn’t mind being paid in Bitcoin. He has also in recent weeks tweeted exuberantly in favor of Dogecoin, a jokey digital currency whose rock-bottom value and trading volume have skyrocketed in response to his remarks.)
Beyond all of the posturing of a bunch of wealthy geeks embracing the supposed currency of the future, these antics have a real effect on the value of Bitcoin and the companies now investing in it. With Bitcoin becoming part of companies’ treasury holdings—to the point where, in the case of MicroStrategy, the price of Bitcoin is potentially a proxy for the value of the company itself—how do we gauge a company’s worth? And how do we judge Musk’s public comments over the last few months, knowing that at some point in Q4 2020, Tesla bought $1.5 billion worth of the very currency he was teasing fans about on Twitter? The SEC has previously charged Musk with fraud for misleading tweets about Tesla’s value. Tweeting about an asset—thus affecting its price—as his company buys up a huge amount of it might also fall under agreements that Musk reached with the SEC in 2018 and 2019.*
In many ways, the world’s most valuable cryptocurrency and the most valuable automaker deserve each other. Both punch far above their weight—indeed, if you listen to their critics, both are fueling enormous bubbles that conceal more systemic risks to the environment and investors alike. Both depend on a kind of faith—that Bitcoin will keep increasing in value and importance and that Musk, who has built his empire on government subsidies and balance-sheet trickery, can keep up the high-wire act long enough for Tesla to sell enough cars to justify its enormous valuation.
For Tesla partisans, this should be a redemptive moment, allowing them to merge their utopian beliefs in Musk and Bitcoin. Their fantasy stands in harsh contrast to reality. Musk long ago revealed himself as a purveyor of impossible infrastructure projects and exploiter of labor willing to gamble with the fortunes of his fans, who hang on his every tweet. But Musk’s fans don’t care about the fundamentals of his business or how he treats his employees. To that end, his trollishness and that of Bitcoiners—whose favorite meme is to tell so-called no-coiners to “have fun staying poor”—align perfectly. Insulated from the consequences of his actions, Musk is free to use valuable environmental credits to play the Bitcoin savior. And should it all go bust, well, there’s always Dogecoin.
* This article has been updated for clarity.