What caused the captain of 14 billion dollars to suddenly want to buy BTC?
Source: beincrypto
Compiled by: Blockchain Knight
American hedge fund manager and billionaire Bill Ackman's recent comments about BTC have caused a stir in the crypto asset community.
Ackman is the CEO of Pershing Square Capital, and he outlined some scenarios under which he might consider buying BTC.
Ackman inferred that increased demand and energy usage would drive BTC prices to soar, leading to rising energy costs, inflation, a weakening dollar, and further demand for BTC.
Ackman believes that this situation could ultimately lead to an economic collapse, prompting him to consider investing in BTC.
However, Ackman also acknowledged the other side of this situation, namely its potential reversibility.
Ackman stated, "The rise in BTC prices leads to an increase in mining volume, an increase in energy usage, driving up energy costs, leading to rising inflation, a depreciation of the dollar, and further increasing BTC demand."
"But the increase in mining volume also drives up the demand for energy, creating a feedback loop. Ultimately, this leads to infinite BTC demand, skyrocketing energy prices, and an economic collapse."
Ackman has almost no relationship with crypto assets.
In 2022, the billionaire stated that he believed Sam Bankman-Fried was not a fraudster, and that the failure of FTX was due to the notorious founder's attempts to avoid embarrassment.
Prior to this, Ackman revealed that crypto assets accounted for less than 2% of his portfolio.
At that time, Ackman stated that he was a small investor in some crypto asset projects and seven crypto asset venture funds, adding that his investments were more of a hobby.
Ackman's comments prompted remarks from some well-known figures in the crypto asset market, who pointed out flaws in Ackman's logic.
River CEO Alexander Leishman stated, "Mining is competitive, and the higher the energy prices, the more unprofitable it becomes. The feedback loop of mining actually encourages miners to use more remote/distributed forms of energy, rather than competing with residential electricity demand for high-end power."
"TL/DR mining does not make energy more expensive. It allows us to monetize energy that would otherwise be wasted."
Meanwhile, MicroStrategy CEO Michael Saylor encouraged Ackman to consider buying BTC but disagreed with his reasoning.
Saylor pointed out that most BTC miners have reduced consumer electricity costs. He then extended an invitation to Ackman for a discussion.
Similarly, Pierre Rochard, Vice President of Research at Riot Platforms, also invited Ackman to delve deeper into the economics of BTC mining.
Rochard also emphasized the intricate feedback loops and the limitations of wealth effect spending and holder rebalancing on BTC purchasing power.
Environmentalist and venture capitalist Daniel Batten also stated that Ackman's logic regarding BTC mining is flawed.
Daniel said, "This logic collapses when larger energy usage ≥ drives up energy prices."
"BTC mining is an excellent way to handle stranded/wasted energy, and the CEO of ERCOT credits low electricity prices to BTC mining."