- Elon Musk was pressured into suspending bitcoin payments to Tesla, according to Eric Schiffer, the CEO at private equity firm The Patriarch Organization.
- The billionaire’s position on bitcoin could get more nuanced, Schiffer told Insider.
- As an electric-vehicle maker, it would not be a good look for Tesla to be excluded from the ESG list, he said.
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Elon Musk’s association with cryptocurrencies arises from his early days in working within the digital payments’ industry as part of the “PayPal Mafia,” according to Eric Schiffer, the chief executive officer at private equity firm, The Patriarch Organization.
“Musk is like the Fed in many ways for crypto,” he told Insider in an interview. “But I still think he’s a crypto maximalist, and it would not surprise me to see his position get further nuanced in time on bitcoin, perhaps less draconian than of late.”
Bitcoin plummeted this week alongside a broader crypto-market sell off after Tesla halted payments made in the cryptocurrency, and China announced digital tokens can’t be used in business. The popular asset showed signs of recovery on Thursday before more rollercoaster trading on Friday.
“The fact that he’s always been one of the iconic cheerleaders of the space, and being a master promoter has tied himself to the currency,” Schiffer said.
Although there are other Silicon Valley entrepreneurs who have been vocal advocates of crypto, Musk has been the most prolific.
The growing challenge Tesla has had to face is an ultimate showdown between cryptocurrencies and a forward-thinking class of investors and environmentalists who have ushered in missions of addressing climate change in the corporate world.
Musk’s promotion of bitcoin was to a large extent off brand for the billionaire owner of an electric-vehicle maker, according to Schiffer.
“He chose, in light of where he or his brands are, to align greater with the future of Tesla, and the future of the environment, and he was forced to make a choice to some degree because he’s known about this data,” he said. “This is not new data.”
Tesla shares spiked to an intraday high of $900 in late January but have slumped to about $585 since then. The company’s market cap has dropped to roughly $560 billion from a peak of almost $870 billion.
The last thing Tesla needs is to not be included on the ESG (Environmental, Social, and Corporate Governance) list because bitcoin is a big portion of the business, and could get challenged on that front, according to Schiffer. In suspending bitcoin payments, Musk “was trying to go core to his brand about large scale principled humanitarian measures to protect people,” he said.
Assuming that the Justice Department, US regulators and the Chinese government have some sway in restraining bitcoin, it could see further consolidation. Schiffer expects it to find ground somewhere between $30,000 and $40,000 before rebuilding.
“Because when you begin to lose institutional, which was a large portion of this lift, it just becomes a slower climb,” he said.