Three months ago, Tesla (TSLA) CEO Elon Musk dropped a bombshell: Tesla would buy $1.5 billion worth of Bitcoin as an investment, and furthermore allow car buyers to use Bitcoin to buy their new Teslas from the company. Three months later… at least the second part of that is no longer true.
“Cryptocurrency is a good idea on many levels,” explained Musk, “and we believe it has a promising future, but this cannot come at a great cost to the environment.” Accordingly, “Tesla has suspended vehicle purchases using Bitcoin [because] we are concerned about rapidly increasing use of fossil fuels for Bitcoin mining and transactions, especially coal, which has the worst emissions of any fuel.”
As for Tesla’s own $1.5 billion worth of Bitcoin, already purchased, “Tesla will not be selling any” of it. Furthermore, Tesla does still “intend” to permit car-buying with Bitcoin at some point in the future, once “mining transitions to more sustainable energy.” In the meantime, the company is exploring allowing car buyers to use “other cryptocurrencies ” (Dogecoin, anyone?) “that use <1% of Bitcoin’s energy/transaction.”
Here’s the problem in a nutshell:
Bitcoin is created, and Bitcoin transactions are tracked, on computers that use electricity. As in… a lot of electricity — on the order of 150 terawatt-hours annually.
Researchers at Cambridge University estimate that creating Bitcoins and supporting Bitcoin transactions around the globe consumes roughly enough power annually to power “entire countries” the size of Argentina, Egypt, or Ireland. Globally, it’s said that nearly 0.7% of all energy consumption is now devoted exclusively to Bitcoin mining and support. That’s a lot of power, and when you consider that some of the easiest-to-produce power in most countries comes from burning coal … well, you can see why a “green” advocate like Musk might see that as a problem.
So what’s the solution? Not all cryptocurrencies are as energy-hungry as Bitcoin. Ethereum, for example, is said to be working to make its operation more efficient. Stellar, Cardano, and Ripple cryptocurrencies are already believed to be a lot less energy-intensive than Bitcoin.
As for cleaning up Bitcoin itself, H.C. Wainwright analyst Amit Dayal noted that one of his picks, energy software and control technology solutions provider CleanSpark (CLSK), is engaged in the mining of Bitcoins, and doing so “at 95% carbon-neutral levels, with ongoing efforts to approach 100% carbon-neutral levels.” If true, this would put it well along a path to meet Musk’s goal of allowing Bitcoin purchases of Teslas to resume at a level of “<1% of Bitcoin’s [current] energy/transaction.”
With or without this catalyst, Dayal believes CleanSpark could grow its sales from $48.7 million to $381.8 million over the next nine years — an annual growth rate of nearly 26%, with “positive annual EBITDA” arriving as early as this year. With a share price of $15 today, but a price target of $50, he’s predicting that CleanSpark will turn into a three-bagger in under a year. (To watch Dayal’s track record, click here)
Judging from the consensus breakdown, it has been relatively quiet when it comes to other analyst activity. Over the last three months, only 2 analysts have reviewed CLSK. Both of which, however, were bullish, making the consensus a Moderate Buy. On top of this, the $47.50 average price target puts the upside potential at 214%. (See CLSK stock analysis on TipRanks)
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Disclaimer: The opinions expressed in this article are solely those of the featured analyst. The content is intended to be used for informational purposes only. It is very important to do your own analysis before making any investment.