The price of one bitcoin rose above $50,000 early Tuesday morning in a small spike that coincided with a tweet from Elon Musk.
By now it’s a story as old as the pandemic: Musk tweets about a cryptocurrency and its price adjusts accordingly.
Fresh off helping trigger a market-wide correction last week with concerns about “rapidly increasing use of fossil fuels for bitcoin mining”, the Tesla CEO has helped cryptocurrencies reverse course in 280 characters or less.
“Spoke with North American bitcoin miners,” he tweeted on Tuesday morning.
“They committed to publish current [and] planned renewable usage [and] to ask miners [worldwide] to do so. Potentially promising.”
The small price spike – it had dropped back to pre-Musk tweet levels within three hours – served to once again show the high volatility of a market built on speculative trading and meme sentiment.
Someone suggested changing Dogecoin fees based on phases of the moon, which is pretty awesome haha— Elon Musk (@elonmusk) May 24, 2021
Musk’s Tuesday morning tweeting also helped push up the price of his pet meme project Dogecoin – which has seen a continued surge above 48 cents per Doge – after he pointed his 55.8 million followers toward Dogecoin development sites on GitHub and Reddit.
A ban on bitcoin mining
North America only makes up an estimated eight per cent of the total bitcoin hashrate – the number of hashes calculated before forming the next block of transactions – but a series of announcements from the country with the most mining activity could see a shift in how the cryptocurrency is produced.
Cryptocurrency price swings, and a lack of centralised control, has been a focus of the Chinese government which last week signaled an end to not only speculative cryptocurrency trading but also bitcoin mining.
The Chinese State Council Financial Stability and Development Committee put cryptocurrency firmly on the agenda during its latest meeting, saying the state should “crack down on bitcoin mining and trading behaviour” in a bid to “prevent and control financial risks”.
A joint statement from Chinese financial industry bodies earlier last week helped to nudge cryptocurrency off a series of historic high prices when it called an end to financial services dabbling in storing and trading cryptographic assets.
Chinese bitcoin miners accounted for between 65 and 72 per cent of the network’s hashrate in the first four months of 2021, according to the Cambridge Centre for Alternative Finance.
While a ban on Chinese mining would affect the hashrate, it hopefully won’t affect the speed or stability of the network thanks to the way Bitcoin is designed.
Every 2,016 blocks, the Bitcoin network checks how long it took for those blocks to be mined and changes the difficulty, a variable in the mining algorithm, in order to keep the individual block mining time at around 10 minutes.
If there are fewer miners on the Bitcoin network – because of, say, the nation with the most mining activity enacting a sudden ban – then it will compensate by making mining easier.