Why does the person in charge of $14 billion suddenly want to buy BTC?
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Why does the person in charge of $14 billion suddenly want to buy BTC?
Ackman believes that increased demand for BTC will ultimately lead to economic collapse.
Navigating Web3 tides with focused insightsSource: beincrypto
Compiled by: Blockchain Knight
Recent comments by American hedge fund manager and billionaire Bill Ackman on BTC have stirred significant controversy within the crypto asset community.
Ackman, CEO of Pershing Square Capital, outlined a scenario under which he might consider purchasing BTC.
Ackman argued that rising demand and energy consumption could drive BTC prices higher, leading to increased energy costs, inflation, a weaker dollar, and further demand for BTC.
He believes this cycle could ultimately trigger an economic collapse, prompting him to consider investing in BTC.
However, Ackman also acknowledged the flip side of this scenario—its potential reversibility.
"Rising BTC prices lead to more mining, which increases energy usage, pushing up energy costs, fueling inflation, weakening the dollar, and further boosting BTC demand," Ackman stated.
"But increased mining drives even greater energy demand, creating a self-reinforcing loop that eventually leads to infinite BTC demand, skyrocketing energy prices, and economic collapse."
Ackman has had almost no prior involvement with crypto assets.
In 2022, the billionaire expressed belief that Sam Bankman-Fried was not a fraud, attributing FTX's failure to the disgraced founder's attempt to avoid embarrassment.
Previously, Ackman revealed that crypto assets accounted for less than 2% of his investment portfolio.
At the time, he said he was a minor investor in several crypto projects and seven crypto-focused venture funds, adding that his investments were more akin to a hobby.
Ackman’s remarks have drawn responses from prominent figures in the crypto market, who pointed out flaws in his reasoning.
Alexander Leishman, CEO of River Company, stated: "Mining is highly competitive—the higher energy prices go, the more money miners lose. The feedback loop in mining actually incentivizes miners to use increasingly remote and decentralized energy sources rather than competing with residential power demand for premium electricity."
"TL;DR: Mining doesn’t make energy more expensive. It enables us to monetize energy that would otherwise be wasted."
Meanwhile, MicroStrategy CEO Michael Saylor encouraged Ackman to consider buying BTC but disagreed with his rationale.
Saylor noted that most BTC miners actually reduce electricity costs for consumers and extended an invitation to Ackman for discussion.
Similarly, Pierre Rochard, Vice President of Research at Riot Platforms, invited Ackman to delve deeper into the economics of BTC mining.
Rochard also emphasized the complex feedback loops, as well as limitations on BTC purchasing power due to wealth effect spending and holder rebalancing.
Environmental advocate and venture investor Daniel Batten also stated that Ackman's logic regarding BTC mining is flawed.
"This logic breaks down when greater energy use ≥ rising energy prices," Daniel said.
"BTC mining is an excellent way to utilize stranded or wasted energy, and ERCOT’s CEO has credited low electricity prices to BTC mining."
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