Billionaire entrepreneur Elon Musk promotes Bitcoin as a defense against inflation, highlighting its energy-based model in response to potential fiat currency debasement driven by a global AI arms race.

Musk believes that Bitcoin’s proof-of-work mechanism is unwavering against inflation pressures caused by government attempts to inject capital into the economy, asserting that “it is impossible to fake energy”.

In a recent post on X, Musk responded to analyst Zerohedge who noted that the current upswing in Bitcoin and precious metals is linked to the debasement needed to fund the AI advancements that major governments are investing in.

“AI is the new global arms race, and capex will eventually be funded by governments (US and China),” wrote Zerohedge in a Tuesday post. Translation: Governments are likely to fund their AI ambitions through extensive expenditure.

Musk’s Previous Bitcoin Insights

In November 2022, Musk articulated concerns about a “long winter” for Bitcoin following the collapse of the FTX exchange, which emphasized the volatility surrounding cryptocurrencies.

Musk’s recent comments are significant as they mark his active engagement with the Bitcoin community after a prolonged hiatus since his last major statement regarding Bitcoin’s future.

FTX’s collapse was primarily due to mismanagement of user funds, culminating in significant losses and sparking widespread concern within the cryptocurrency market.

Musk had previously raised alarms over Bitcoin mining’s environmental impact but has not revisited these concerns in light of Bitcoin’s growing sustainability metrics. As of recent data, Bitcoin mining’s sustainable energy use has surpassed 55%, a positive indication for the cryptocurrency’s future viability.