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Tim Draper Stands Up for Bitcoin Amid Elon Musk U-Turn

2 mins
15 May 2021, 13:20 GMT+0000
Updated by Ryan James
15 May 2021, 13:20 GMT+0000
In Brief
  • Tim Draper refers to energy and CO2 emissions involved in modern banking system.
  • DFJ founder suggests Elon Musk should stop accepting fiat currencies for purchases at Tesla.
  • The recent decline in Bitcoin (BTC)'s price has been attributed to Musk's recent decision.
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Tim Draper has issued a belated response to Elon Musk’s decision to withdraw Bitcoin (BTC) as a payment option at Tesla.

The global investor and billionaire, who has founded a number of enterprises including venture capital firm Draper Fisher Jurvetson (DFJ), riposted Elon Musk’s environmental standpoint on BTC, by referring to the energy and carbon dioxide implications of the current banking system.

Taking to Twitter, he suggested that Musk should not accept fiat currencies for cars instead.

Elon Musk announced on May 12 that his company Tesla had suspended vehicle purchases in BTC. In a statement that he tweeted, he made it clear that while cryptocurrency is “a good idea on so many levels,” and that the future is promising, the future “cannot come at great cost to the environment.”

He referred to the fossil fuel emissions involved in Bitcoin mining. The tweet, which was the first in a thread, also emphasized that Tesla intends to retain its BTC and will use it in transactions in future, once mining is a more sustainable energy source.

The tech mogul clarified a day later, to reiterate how much he believes in crypto. However, his stance has been attributed to the recent decline in BTC’s price. According to data, BTC has been on a steady slope since May 14, falling below the $50,000 threshold. It has struggled to surpass that threshold again since the morning of May 15.

The Elon Musk effect on crypto

This, in turn, is yet another example of Elon Musk’s influence, or the so-called “Musk Effect”. Over the last few weeks, the Tesla and SpaceX CEO has become notorious for affecting cryptocurrency prices with his social media activity. Most notably, the performance of Dogecoin (DOGE). His tweets have previously impacted the surge in price of DOGE, which has climbed near 20,000% this year. 

After a string of all-time highs, DOGE finally had something of a fall from grace. Musk’s appearance as host of Saturday Night Live on May 8 triggered a sell-off that caused the price to crash from $0.66 to $0.50 in the space of 45 minutes. It continued to decline throughout the day, but has since regained some of its position. At time of writing, data indicated that DOGE remains firmly above the $0.50 threshold.

BTC advocates voice their support

Draper is the latest high-profile figure to voice support for the world’s largest cryptocurrency. While BTC’s performance is hardly at its best at the moment, it is regarded as “the apex predator” of digital currencies by financier and investment advisor Anthony Scaramucci. The SkyBridge Capital founder said he advises his clients to own 1-3% in BTC to avoid missing out.

Meanwhile financial services company Square also took a stance on BTC in light of Musk’s decision. They indicated their stance was more in line with Tesla; that they will not buy any more BTC until the fossil fuel emission issue is addressed. That said, Square execs remain supporters of BTC. Co-founder Jack Dorsey stated on Twitter that Square “will forever work to make bitcoin better”.


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