Billionaire entrepreneur and Tesla CEO Elon Musk highlighted Bitcoin’s potential to shield investors from the effects of fiat currency inflation, particularly as analysts anticipate a government-driven race to develop artificial intelligence.
Musk has lauded Bitcoin’s (BTC) energy-intensive proof-of-work method for its robust inflation-resistant properties, claiming it is impervious to the effects of government fiat currency issuance since “energy can’t be faked.”
“This is why Bitcoin is grounded in energy: you can produce counterfeit fiat currency, and every government in history has done that, but you cannot counterfeit energy,” Musk stated in a post on X on Tuesday post.
Musk’s remarks followed a post from influential analyst Zerohedge, which linked the current surge in Bitcoin and precious metals to a potential “debasement” to fund a government-led AI competition among the world’s leading economies.
“AI represents the new global arms race, and capital expenditures will ultimately be financed by governments (US and China),” wrote Zerohedge in a Tuesday X post, which attributed the recent bullish trend of Bitcoin, gold, and silver to the “debasement to support the AI arms race.”
Related: $19B crypto market crash was ‘controlled deleveraging,’ not cascade: Analyst
Musk predicted Bitcoin’s “long winter” after FTX collapse
This response marked Musk’s first significant public engagement concerning Bitcoin in almost three years, dating back to November 2022, when he anticipated a crypto winter shortly following the FTX and Alameda Exchange collapse.
“BTC will endure, but it may be a lengthy winter,” Musk stated in an X post on Nov. 14, 2022, in reaction to Bitcoin reaching its former bear market low of $16,000.
FTX’s failure was due to the misallocation of user funds, culminating in an $8.9 billion loss for investors. The crypto platform filed for bankruptcy on Nov. 11, 2022, and was noted as a significant catalyst for the ensuing crypto winter.
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Musk has not yet weighed in on the sustainability of Bitcoin mining, which he has previously criticized for its dependency on fossil fuels.
In May 2021, Tesla halted Bitcoin payments for vehicle purchases due to environmental concerns, prompting a 6% drop in Bitcoin’s price within an hour, from $54,800 to approximately $51,600.
While Tesla has not divested most of its Bitcoin holdings, the company has yet to clarify if it plans to resume Bitcoin payments, despite Musk’s earlier assurance that this would happen if the mining network’s renewable energy usage improved.
On June 13, 2021, Musk stated that Tesla would accept BTC transactions once it verified that the Bitcoin mining network operated on at least 50% clean energy.
Bitcoin mining’s sustainable energy utilization reached a historic peak of over 55%, according to a graph created by climate tech venture capitalist Daniel Batten and Bitcoin analyst Willy Woo.
Cointelegraph has reached out to Tesla for comment.
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