Why does the head of a $14 billion fund suddenly want to buy BTC?

Source: beincrypto

Compiled by: Blockchain Knight

American hedge fund manager and billionaire Bill Ackman’s recent remarks about BTC caused an uproar in the Crypto asset community.

Ackman, the CEO of Pershing Square Capital, outlined some scenarios where one might consider buying BTC.

Ackman theorized that increased demand and energy usage would drive BTC prices soaring, leading to higher energy costs, inflation, a weaker dollar, and further BTC demand.

Ackman believes that this situation could eventually lead to an economic collapse, prompting him to consider investing in BTC.

However, Ackman also acknowledges the other side of the situation, namely its potential reversibility.

Ackman said: "The rise in BTC prices has led to an increase in mining volume and energy usage, which has pushed up energy costs, led to an increase in inflation, and the depreciation of the U.S. dollar, which has promoted a further increase in demand for BTC."

"But the increase in mining volume has promoted the demand for energy, and the cycle continues. In the end, the demand for BTC has become unlimited, energy prices have skyrocketed, and the economy has collapsed."

Ackman has almost nothing to do with Crypto assets.

In 2022, the billionaire said he believed Sam Bankman-Fried was not a scammer and that FTX failed because the disgraced founder was trying to avoid embarrassment.

Previously, Ackman had revealed that Crypto assets accounted for less than 2% of his investment portfolio.

At the time, Ackman said he was a small investor in a number of crypto-asset projects and seven crypto-asset venture funds, adding that his investing was more of a hobby.

Ackman’s comments prompted comments from some of the biggest names in the crypto asset market, who pointed out flaws in Ackman’s logic.

River CEO Alexander Leishman said: “Mining is highly competitive and the higher the energy price, the more money you lose. The feedback loop of mining actually encourages miners to use more and more remote/distributed forms of energy rather than competing with residential electricity demand. high-end power.”

“TL/DR mining does not make energy more expensive. It allows us to monetize energy that would otherwise be wasted.”

Meanwhile, MicroStrategy CEO Michael Saylor encouraged Ackman to consider buying BTC but disagreed with his reasoning.

Saylor noted that most BTC miners have reduced electricity costs for consumers. It then extended an invitation to Ackman for discussion.

Likewise, Pierre Rochard, vice president of research at Riot Platforms, invited Ackman to delve into the economics of BTC mining.

Rochard also highlighted the intricate feedback loops and limits on BTC’s purchasing power through wealth effect spending and holder rebalancing.

Environmentalist and venture capitalist Daniel Batten also said that Ackman’s logic regarding BTC mining is flawed.

“This logic breaks down when greater energy use drives energy prices higher,” Daniel said.

“BTC mining is an excellent way to deal with stranded/wasted energy, and ERCOT’s CEO also credits BTC mining for keeping electricity prices low.”