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Elon Musk says Tesla will likely start accepting bitcoin again

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Tesla CEO Elon Musk said the company will likely start accepting bitcoin for vehicle purchases again.

“It looks like bitcoin is shifting a lot more toward renewables and a bunch of the heavy-duty coal plants that were being used…have been shut down, especially in China,” said Musk on Wednesday at The B-Word conference, an event hosted by the Crypto Council for Innovation.

“I want to do a little more due diligence to confirm that the percentage of renewable energy usage is most likely at or above 50% and that there is a trend toward increasing that number. If so, Tesla will most likely resume accepting bitcoin,” he said.

In May, Musk said on Twitter that the company would suspend vehicle purchases using bitcoin out of concern over the “rapidly increasing use of fossil fuels for bitcoin mining.”

Since then, Beijing has cracked down on crypto, expelling the country’s crypto miners, who have since begun to patriate elsewhere. New data from Cambridge University shows many miners are headed to the U.S., which is now the second-biggest destination for the world’s bitcoin miners.

The U.S. is home to some of the cheapest sources of power on the planet, which, more often than not, are renewable. Fred Thiel of Marathon Digital said most miners new to North America will be powered by renewables, or gas offset by renewable energy credits, and Compass CEO Whit Gibbs estimated that bitcoin mining in the U.S. is more than 50% powered by renewables. 

“Long-term, renewable energy will be the cheapest energy, but it doesn’t just happen overnight,” Musk said. “But as long as there is a conscious and determined, real effort by the mining community to move toward renewables, then obviously Tesla can support that.”

Bitcoin was trading nearly 8% higher on Wednesday.

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Tesla caused two-thirds of my personal, professional pain

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Elon Musk, founder of SpaceX and chief executive officer of Tesla Inc., arrives at the Axel Springer Award ceremony in Berlin, Germany, on Tuesday, Dec. 1, 2020.

Liesa Johannssen-Koppitz | Bloomberg | Getty Images

Tesla CEO Elon Musk said Wednesday that his electric vehicle and solar business could help bitcoin miners switch to renewable energy, but is currently limited by tight supply of battery cells.

He also acknowledged that Tesla is still not manufacturing its custom-designed 4680 cells for commercial use in electric cars or energy storage systems yet.

The comments came during an appearance at The B Word Conference, which was focused on bitcoin and other cryptocurrencies. During a panel, Square Crypto lead Steve Lee asked Musk what the energy-intensive bitcoin industry can do “to accelerate the transition to renewable energy” and “could Tesla Energy play a role?”

Musk replied, “Well, I think Tesla can play a role.”

Then, the 50-year-old CEO broke into a reflective moment, implying that Tesla’s entire reason for existence was to transition the world to clean energy.

“I would say I’ve had some pretty tough life experiences and Tesla’s probably responsible for two-thirds of all personal and professional pain combined to give you a sense of perspective there.”

Tesla’s energy business

Tesla has been selling commercial and residential solar installations since acquiring SolarCity in 2016 for around $2.6 billion, a deal that landed Musk in a Delaware court this month.

But before it got into the solar business, Tesla created and began selling energy storage products in 2015, including a backup battery for homes called the Powerwall, and larger batteries that can store solar or wind energy generated intermittently so it is available for use whenever utilities need it.

Tesla has installed a number of these utility-scale energy storage systems, Musk reminded his audience on Wednesday, that have helped utilities with “load-leveling the grid,” including in South Australia and elsewhere. But he noted that battery production was currently constraining produciton.

“In fact the limiting factor for us right now is cell production. So we need to both internally get our Tesla internal battery cells produced as well as increase supply from suppliers.”

Musk also repeated that even once Tesla can make its own battery cells, it will still rely on other battery cell makers. Its current cell suppliers include Panasonic, LG and CATL.

“Generally when I talk to our suppliers and they say ‘how many cells would you like?’ I say ‘how many cells can you make?’ you know ’cause sometimes they’re concerned, is Tesla gonna compete with them on cells? I’m like no no, if you want to make the cells be our guest. It’s just that we need a crazy number of batteries.”

In a Twitter exchange with fans after the bitcoin conference, Musk wrote that Tesla is still “not quite done” getting to “volume production” of its custom-designed 4680 battery cells.

He also acknowledged that Tesla sold Maxwell Technologies’ ultra-capacitor business and other assets to a San Diego-based startup called UCap Power, which is led by Gordon Schenk, preivously Tesla’s VP of sales for its Maxwell division.

Tesla initially acquired Maxwell in 2019 in a deal valued over $200 million. The exact terms of the sale to UCap Power Inc. were not disclosed, but may be discussed when Tesla holds its second-quarter earnings call on Monday, July 26.

Finally, at The B Word conference, Musk said energy storage systems, combined with solar and wind weren’t the only ways to transition bitcoin to cleaner energy. He endorsed existing hydropower, geothermal and nuclear energy to reduce the environmental impact of bitcoin mining.

“My expectation is not like that the energy production must be pure as the driven snow, but it also cannot be using the world’s dirtiest coal which it was for a moment there. So. You know, that’s just difficult for Tesla to support in that situation. I do think long-term renewable energy will actually be the cheapest form of energy, it just doesn’t happen overnight.”



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Stock futures are flat after major averages turn positive for the week

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U.S. stock index futures were flat in overnight trading on Wednesday, after the major averages advanced during regular trading to turn positive for the week.

Futures contracts tied to the Dow Jones Industrial Average gained 27 points. S&P 500 futures and Nasdaq 100 futures were marginally higher.

During the session the Dow gained 286 points, or 0.83%, while the S&P climbed 0.82%. The Nasdaq Composite was the relative outperformer, rising 0.92%. Energy was the top-performing S&P group, advancing 3.5% as oil prices rebounded.

Wednesday’s gains built on Tuesday’s strong session, and the major averages have now erased the losses from Monday’s sell-off. The Dow dropped more than 700 points to start the week as rising Covid cases worldwide hit sentiment. The yield on the 10-year Treasury dipped to a five month low of 1.17% at the beginning of the week, which also caused investors to offload equities. On Wednesday the yield on the 10-year rose 8 basis points to 1.29%.

“The truth is investors have been very spoiled by the recent stock market performance,” noted LPL Financial chief market strategist Ryan Detrick. “Incredibly, we haven’t seen as much as a 5% pullback since October. Although we firmly think this bull market is alive and well, let’s not fool ourselves into thinking trees grow forever. Risk is no doubt increasing as we head into the troublesome August and September months.”

Stock picks and investing trends from CNBC Pro:

A busy week of earnings will continue on Thursday. AT&T, D.R. Horton, Southwest Air, American Airlines, Abbott Labs and Union Pacific are among the names on deck before the opening bell. Intel, Twitter, Snap and Capital One will post quarterly updates after the market closes.

So far 15% of the S&P 500 has reported earnings, with 88% beating earnings estimates, according to Refinitiv. Of the companies that have reported 84% have topped revenue expectations.

Investors will also be watching the weekly jobless claims number from the Department of Labor on Thursday. Economists polled by Dow Jones are expecting the number of first-time filings to be 350,000, down from the prior reading of 360,000. Existing home sales figures will also be released.

“We expect a continuation of sloppy trading through the seasonally-weak summer months; however, our base case remains that the primary trend over the next 12 months remains higher,” Keith Lerner, chief market strategist at Truist wrote in a note to clients. “The S&P 500, which just made a new record high last week, has gone one of the longest periods of the past decade without so much as a 5% pullback,” he added.

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Opportunities from struggle between the U.S. and China, economist says

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Chinese authorities have promoted the use of the yuan worldwide, while the U.S. dollar dominates global transactions.

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BEIJING — When it comes to the investment outlook, one Chinese economist predicts once-a-century opportunities will emerge from a “struggle for supremacy” between the U.S. and China.

This game-changing window comes from upheaval on both sides, said Liu Yuhui, director of a finance research department at a government think tank, the Chinese Academy of Social Sciences.

China is set on becoming a great nation, he said, while the U.S. has embarked on a dollar-printing policy since the coronavirus pandemic that has changed the financial balance.

That’s according to a CNBC translation of his Mandarin-language speech, titled “The bipolar world under the U.S.-dollar super-expansion cycle — The Chinese capital market’s ‘cognitive revolution.'”

Liu, also chief economist at Tianfeng Securities, was speaking Friday at asset manager ChinaAMC’s investment strategy conference. Founded in 1998, ChinaAMC is one of the country’s largest mutual fund managers and has 1.54 trillion yuan ($240.63 billion) in assets under management.

In Liu’s view, the U.S. is implementing the concept of “modern monetary theory“ (MMT), which holds governments with their own strong currency can print money to support the domestic economy without worrying too much about budget deficits.

One of the most well-known proponents of modern monetary theory is Stephanie Kelton, formerly chief economist for Democrats on the U.S. Senate Budget Committee and a senior economic advisor to Bernie Sanders′ 2016 presidential campaign.

The U.S., under the Trump administration and subsequently the Biden administration, has kept interest rates low and released trillions of dollars into the economy to support growth in the wake of the pandemic.

The stimulus program has drawn criticism for its scale. At conglomerate Berkshire Hathaway’s annual meeting in May, U.S. billionaire Warren Buffett’s longtime business partner Charlie Munger said modern monetary theory might be “more feasible than everybody thought. But I do know that if you just keep doing it without any limit it will end in disaster.”

Read more about China from CNBC Pro

Meanwhile in China, the ruling Chinese Communist Party just celebrated its 100th anniversary on July 1, when President Xi Jinping called again for the “great rejuvenation” of China.

To Liu, the government’s stance means policy will focus on ensuring national security and cutting carbon emissions. He emphasized political correctness will be even more critical for investment in light of developments like Alibaba founder Jack Ma’s controversial speech last fall and the subsequent suspension of Ant Group’s IPO.

Mainland Chinese stocks with the highest probability of large gains will be those in the new energy, seed, optics and semiconductor industries, among others, Liu said.

As for digital currencies, on which Chinese authorities have intensified their crackdown this year, Liu cast them in geopolitical terms as well.

“In my view,” he said, “it’s just the U.S.’ way to tempt Chinese capital.”

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