Billionaire entrepreneur and Tesla CEO Elon Musk highlighted Bitcoin’s potential to shield investors from fiat currency inflation, which analysts suggest may escalate due to a coming government-funded competition in artificial intelligence development.
Musk has commended Bitcoin’s (BTC) energy-based proof-of-work framework, noting its resistance to inflation stemming from government fiat currency creation, since “energy cannot be faked.”
“That is why Bitcoin is rooted in energy: while it’s possible to create counterfeit fiat currency, every government throughout history has done this, but you cannot counterfeit energy,” Musk stated in a post on X on Tuesday post.
This remark by Musk was in reply to a widely-read post by analyst Zerohedge, which attributed the recent interest in Bitcoin and precious metals to a “debasement” to support the impending AI arms race among the world’s biggest economies.
“AI represents the new global arms race, and capital expenditures will ultimately be financed by governments (US and China),” Zerohedge noted in a Tuesday X post, linking the recent upward trend in Bitcoin, gold, and silver to the “debasement to fund 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 comment on Bitcoin in nearly three years, following his November 2022 prediction of an impending crypto winter after the FTX and Alameda Exchange collapse.
“BTC will prevail, but it may be a long winter,” Musk wrote in an X post on Nov. 14, 2022, as Bitcoin reached the previous bear market’s lowest price of $16,000.
The fallout from FTX was rooted in the mismanagement of user funds, leading to an $8.9 billion loss for investors. The crypto exchange declared bankruptcy on Nov. 11, 2022, and was viewed as the primary trigger for the ensuing crypto winter.
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Musk has not yet addressed the long-term viability of the Bitcoin mining network, which he previously criticized for its dependency on fossil fuels.
In May 2021, Tesla haltingly ceased accepting Bitcoin for vehicle purchases due to environmental issues. This decision saw Bitcoin’s value drop by 6% within an hour, from $54,800 to approximately $51,600.
While Tesla has retained most of its Bitcoin holdings, the company has not provided an update on the potential reinstatement of Bitcoin payments, despite Musk’s earlier commitment to revisit this if the mining network increased its renewable energy use.
On June 13, 2021, Musk stated that Tesla would accept BTC transactions again once it could verify that the Bitcoin mining network utilized at least 50% clean energy.
The sustainable energy usage in Bitcoin mining has recently reached an all-time high of over 55%, as illustrated by a model developed by climate technology venture capitalist Daniel Batten and Bitcoin analyst Willy Woo.
Cointelegraph has reached out to Tesla for further comments.
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