After bitcoin was still climbing one record high after another in April, things suddenly looked very different in May. For ARK Invest founder Cathie Wood, it is clear who is to blame for the crypto crash. Many margin traders lost a lot of money.
Most recently, the prices of the most popular cryptocurrencies were mainly going down. The best example is the cyber pioneer Bitcoin: While the digital coin reached a record high of 64,863.10 US dollars in April, it recently went down to 30,000 US dollars. For the “best investor in the world” and ARK Invest founder Cathie Wood, who had repeatedly expressed optimism about the cyberdevise, it is clear who is to blame for the recent drop in the price of digital assets: Tesla CEO Elon Musk and the ESG movement in the market.
Bitcoin polluter: ESG trend reaches crypto market.
In an online conference held by crypto portal CoinDesk at the end of May, the investor expressed her suspicion that the trend around sustainable responsibility had also reached the crypto market and influenced investors. “[The price plunge] was brought on by the ESG movement and this notion, exacerbated by Elon Musk, that there are some real environmental issues with mining Bitcoin. A lot of institutional buying has been paused,” the founder said in the interview.
The acronym ESG stands for Environment, Social and Governance and addresses issues such as environmental protection, as well as social aspects and oversight structures in companies. This awareness has now reached institutional investors, she said. In February, Cambridge University published a study in which researchers examined the scope of the electricity consumed in mining.
- The mining process alone for Bitcoin, the largest cryptocurrency, would consume 121.36 terawatt hours per year.
- That would put Bitcoin above the energy footprint of Argentina and just below that of Norway, BBC reported.
- That consumption would tend to fall is unlikely, the university’s scientists said.
After crypto investment: Tesla drops bitcoin
Previously, Musk repeatedly spoke positively about the crypto trend and especially praised the crypto veteran Bitcoin and the fun currency Dogecoin on his Twitter profile. Shortly thereafter, Tesla announced that it had not only invested a billion dollar amount in Bitcoin, but would also offer its customers the opportunity to pay for their vehicles with the internet coin.
Only a short time later, the CEO published a statement from the group on his Twitter profile, explaining that this payment option would now be eliminated. “We are concerned about the rapidly growing use of fossil fuels for bitcoin mining and transactions, especially coal, which has the worst emissions of any fuel,” the e-car pioneer said. “Cryptocurrency is a good idea in many ways and we believe it has a promising future, but it can’t be done at the expense of the environment.”
However, Wood believes it is unlikely that Musk himself came to this conclusion, as she further explained to CoinDesk. “Elon probably got some calls from institutions,” the entrepreneur surmised. “I noticed that BlackRock is the third largest shareholder in [Tesla] and Larry Fink is the CEO. He’s focused on ESG and climate change in particular. I’m sure BlackRock has registered some complaints, and maybe there are some very large holders in Europe who are very sensitive to that.”
High potential: Wood with mega price target
In the long run, however, Musk’s wide reach will play into Bitcoin’s cards, as the entrepreneur known for her innovative ETFs believes. For example, the former crypto fan’s critical comments could lead to cryptocurrencies evolving and having a smaller carbon footprint. “He’s stimulated a lot more conversation, a lot more analytical thinking. And I think he will become part of the process,” Wood said. This would also restore the currently dwindling confidence of institutional investors. The expert firmly believes that central banks will also soon invest in Bitcoin & Co. to balance their balance sheets. Speaking to Bloomberg news agency recently, she stated that the increasing supply of solar energy will benefit cyberdevices. “We believe solar adoption will accelerate dramatically – because there’s another profit center associated with it: bitcoin mining,” Woods confidently predicted. Accordingly, she believes a bitcoin price of $500,000 is realistic.