The richest man on planet earth is looking to start a mars mission one fine day and eventually allow mankind to colonize the red planet in the future. But until that day it seems that his most important business is Dogecoin. Musk has caused a controversy over the last year and he is doing it again.
Tesla adopts Dogecoin
Yesterday Elon dropped the bomb on Twitter and announced that Tesla is going to accept Dogecoin for payment. While it seems that this is just a trial and that DOGE is only accepted for a few selected merchandise products, the decision came somewhat to surprise. Should this first test is going to be successful, then Tesla might even open up further to Dogecoin.
It was in May 2021 when Musk announced that Tesla would no longer accept Bitcoin for payments. According to him, the company was concerned about the environmental impact of Bitcoin mining. Musk added a month later that Tesla will consider accepting Bitcoin payments again once the environmental impact of mining is reduced. This would either require more efficient mining hardware or green energy usage throughout the mining industry.
Dogecoin is also dependent on mining and it is not clear why DOGE should be more suitable for payments than Bitcoin. The dogecoin community on the other hand didn’t care that much for those concerns and was cheerful about the adoption and accompanied the tweet with joyful memes.
Market reacts heavily
Despite the fact that the market plunged since December 4th, Dogecoin took off and gained about 35 % within a few hours after Musk tweeted. The “Dogefather” is known to occasionally tweet about his favourite cryptocurrencies and especially Dogecoin.
Giving meme coins so much exposure has raised the question of whether Musk is manipulating the market or not. Critics claim that a person in his position has to adhere to standards that protect investors and that his behaviour on social media is causing losses for retail investors who are trying to catch the train before it leaves the station. But once Musk has moved the market it becomes unlikely that late investors can profit from the situation.
On the other hand, studies reveal that retail investors are well aware that an investment in crypto can be a risky endeavour. Therefore, one could argue that they are well aware of the risks. But what is more interesting is the question of whether Musk is willing to rehabilitate Bitcoin. Tesla still holds Bitcoin and has no plans to sell it. Holding the asset while at the same time rejecting to use it for everyday business transactions seems to be a little bit odd.