KEY POINTS
- Ackman drew comments from Bitcoin bulls after he drew up a "scenario" about Bitcoin mining pushing energy prices up
- Saylor, a known BTC maximalist, offered to discuss what he suggested may be a misconception about mining
- Riot Platforms' Rochard also offered to discuss "mining economics" with the hedge funder
Billionaire and hedge funder Bill Ackman took the crypto community by storm over the weekend after he indicated that he may consider purchasing Bitcoin as the world's first decentralized cryptocurrency continues to break its own records.
In a post on X, formerly Twitter, that has been viewed over five million times, Ackman provided a scenario where the Bitcoin price rally "leads to increased mining and greater energy use," which then pushes energy costs up. High energy costs then result in an inflation spike, causing the U.S. dollar to decline. He said increased demand for Bitcoin puts more work on the shoulders of miners, "driving demand for energy and the cycle continues."
A scenario:
— Bill Ackman (@BillAckman) March 9, 2024
Bitcoin price rise leads to increased mining and greater energy use, driving up the cost of energy, causing inflation to rise and the dollar to decline, driving demand for Bitcoin and increased mining, driving demand for energy and the cycle continues.
Bitcoin… https://t.co/a5LzX69R7q
Ackman further expanded his "scenario." Bitcoin hit "infinity, energy prices skyrocket, and the economy collapses." Finally, the prominent hedge fund manager wrote: "Maybe I should buy some Bitcoin."
His post has since drawn the attention of Bitcoin bulls, including MicroStrategy founder and executive chairman Michael Saylor, who is more than a bull, but is widely recognized as a maximalist.
Saylor said Sunday that Ackman should purchase Bitcoin, "but not for the reasons cited above." He said that contrary to Ackman's perceived scenario, most Bitcoin miners are pushing down energy costs for some consumers. He also offered a "1 on 1" discussion with the financial mogul.
You should buy some #bitcoin, but not for the reasons cited above. Most bitcoin miners are driving the cost of electricity down for other consumers, not up. Let me know if you would like to discuss 1 on 1.
— Michael Saylor⚡️ (@saylor) March 9, 2024
Pierre Rochard, vice president of research at BTC mining firm Riot Platforms, also took to Ackman's comments section Sunday, urging the billionaire to visit Rockdale so they can talk about Bitcoin "mining economics." He noted that "purchasing power can't go straight up due to wealth effect spending."
Bill, come visit Rockdale and let’s talk #bitcoin mining economics. There’s a lot of feedback loops, #btc purchasing power can’t go straight up due to wealth effect spending / rebalancing of holders.
— Pierre Rochard (@BitcoinPierre) March 9, 2024
Troy Cross, an advisory board member at Berkeley-based Vespene Energy, said "Bitcoin's price rising will not – except in some extreme scenarios – cause electricity prices to rise." He went on to explain that the cryptocurrency may consume a lot of energy for a short period "during outrageous Bitcoin price spikes," it will inevitably return to its place in energy consumption "as bottom feeder, not apex predator."
Bitcoin’s price rising will not—except in some extreme scenarios—cause electricity prices to rise.
— Troy Cross (@thetrocro) March 9, 2024
As soon as it is profitable to mine on expensive power, more ASICs are manufactured and deployed, sharing the same global block reward, and thereby reducing the profitability of…
Muneeb Ali, co-creator of BTC layer-2 Stacks, also joined the discussion, saying "it's great" that the hedge fund titan was thinking about Bitcoin. He noted that new layers built on top of Bitcoin that users will utilize to make BTC payments "don't cost energy." Furthermore, Bitcoin is "driving innovation in the energy sector and putting latent/wasted energy to work," as per Ali.
Bill, it’s great that you are thinking about Bitcoin! A couple of points:
— muneeb.btc (@muneeb) March 9, 2024
- The rate of new BTC entering the market through mining drops by 50% every 4 years and in approx 12 years the rate will be effectively zero. At that time Bitcoin will largely run on transaction fees that…
The latest talks regarding Bitcoin mining came after Bitcoin miners scored a win against the Energy Information Administration (EIA), which has been moving to collect the energy usage data of crypto miners. A Texas court found late in February that the EIA's move was likely "an abuse of discretion."
