Musk is right that dirty bitcoins and clean Teslas don’t sit well together

The currency is an environmental abomination and investors should be pleased the founder has said so

Elon Musk moves in mysterious ways, so it would be foolish to assume that his new sceptical stance on bitcoin will last longer than his previous cheerleading. But he has now landed on the right spot: bitcoin is an environmental abomination.

Researchers at the University of Cambridge Centre for Alternative Finance have been chronicling as much for ages. At last count, electronic mining of the cryptocurrency was consuming the same quantity of energy as economies the size of Argentina or the Netherlands. That matters because the super-computers in China, the ones doing the bulk of the mining, are running mostly on electricity generated by coal – the point referenced by Musk.

The crypto crew will counter that gold and other “stores of value” (their description-cum-hope) aren’t squeaky-clean either. True, but the difference with bitcoin is that the puzzle-solving method of discovery makes the energy consumption more intense over time. And the plea in some quarters that the computers’ vast appetites will boost the advance of low-cost solar energy is, to put it mildly, elaborate. In the here and now, bitcoin mining is a dirty business.

True believers weren’t happy about Musk’s U-turn but Tesla’s shareholders ought to be delighted. The founder’s talent for publicity has saved the company a fortune in advertising, but there were clear dangers in tying his personal brand, and Tesla’s, to a single cryptocurrency.

A plunge in the price of the coins would not help his popularity. Being seen to step off the rollercoaster when the price is 25% off its highs but, critically, up massively over 12 months, may prove smart timing.

More importantly, dirty bitcoins and clean Teslas just don’t sit well together. That was also true in February, of course, when Tesla was a buyer of $1.5bn-worth and said it would accept payment in the tokens. Don’t expect Musk or the board to explain the about-turn, but it may be a belated recognition that bitcoin’s dire environmental record was a business risk too far for Tesla. Maverick geniuses can get away with a lot, but hypocrisy tends to take a toll in the end.

All BT needs to do now is to dig

BT had to be cajoled and threatened over many years, but it is finally in a defensible position on fast-fibre broadband rollout. The company will aim to reach 25m premises by the end of 2026, an upgrade on the previous promise of 20m by the mid-to-late part of this decade.

The City, in its dull way, preferred to concentrate on the short-term hit to cashflows, the consequence of investing more money sooner. The shares fell 6%.

Investors ought to count their blessings. BT has secured its “fair bet” on financial returns – the cause of all the wrangling – and has been gifted “super deductions” on infrastructure spending for two years.

Meanwhile, the last lot of 5G licences were secured at lower-than-expected prices. The dividend is back at 7.7p a share. Even the pension fund has become slightly less heavy.

The financial cherry would be joint-venture deals with infrastructure investors to fund the rollout to 5m of the 25m premises, but the chief executive, Philip Jansen, is adamant that BT can take the solo route if necessary.

When the trenches have been dug and filled, BT should account for somewhere between one half and two-thirds of the UK’s fast-fibre network. The rejigged plan has tilted the odds towards the higher figure, which is surely a good thing for investors. One wonders how the directors, reportedly, find so much to quarrel over. The outlook looks clear for the next half-decade. Just dig.

James Anderson’s Amazon tease is intriguing

James Anderson, one of the world’s best technology investors, signed off his last set of figures as co-manager of the £15bn Scottish Mortgage Investment Trust by taking a pop at all favourite targets: the “irretrievably broken” fund management industry, media doom-mongers, and more.

He’s right on all his main points, of course. The investment game changed when it became possible for companies to grow their revenues at a compound rate of 41% for over two decades, as Amazon has done. It is amazing that Scottish Mortgage’s success has not spawned more fund imitators that hunt for such “extreme upside” opportunities.

But there was also a tease on Amazon as Jeff Bezos steps down as chief executive. “Amazon is now seen as good value, safe and acceptable. It no longer has a founder CEO. We fear that in his inimitable terms it is no longer Day 1 in Seattle.” From an investor who knows Bezos’s creation inside out, that’s intriguing.


Nils Pratley

The GuardianTramp

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