Elon Musk Is No Longer the Richest Person. How Did It Happen So Fast?
While Musk's meteoric rise to the top was short, his time there was much shorter — losing his top spot on Monday as the number-one billionaire after shares in the electric car company fell 8.6% — which saw $15.2 billion shaved off of his fortune.
Jeff Bezos now holds first place in the weird race of being the richest person in the world again — at $186.3 billion, compared to Musk's remaining $183. But how did Musk lose his position so quickly?
Elon Musk is no longer the richest person on Earth
As the sharpest single-day drop in Tesla's share price since September, the 8.5% fall was partly caused by Musk's tweets about bitcoin — saying bitcoin and other cryptocurrencies "do seem high." By Tuesday morning, the all-electric car company's shares had already dropped another 6%.
Musk's comments came only two weeks after the all-electric company bought $1.5 billion in bitcoin — thrusting the cryptocurrencies price to unprecedented heights. Bitcoin eventually rose to $58,000 on Sunday, but has dropped back to $47,500 on Tuesday morning.
Regardless, Musk's bitcoin moves raised the value of bitcoin five-fold over the last year.
Elon Musk said Tesla's bitcoin buy reflected the company's will
"Money is just data that allows us to avoid the inconvenience of barter. That data, like all data, is subject to latency and error," tweeted Musk in reply to Peter Schiff, a stockbroker and gold investor. "The system will evolve to that which minimizes both. That said, bitcoin and ethereum do seem high."
Last week, Elon Musk said Tesla's decision to buy $1.5 billion in bitcoin was a company decision, and wasn't up to him alone. "Tesla's action is not directly reflective of my opinion," tweeted the tech billionaire.
"Having some bitcoin, which is simply a less dumb form of liquidity than cash, is adventurous enough for an S&P 500 company," tweeted Musk. "When fiat [referring to government-issued] currency has negative real interest, only a fool wouldn't look elsewhere. Bitcoin is almost as bs [bullshit] as fiat money. The key word is 'almost.'"
Musk's support for Bitcoin is renowned
In January, Tesla disclosed its bitcoin holding in a filing with the U.S. Securities and Exchange Commission (SEC). At the time, the company said it had "updated our investment policy to provide us with more flexibility to further diversify and maximize returns" to enable the all-electric automaker to re-invest its cash reserve in "alternative reserve assets including digital assets."
Tesla also said its audit committee had approved the decision, and so it had "invested an aggregate $1.5 billion in bitcoin under this policy and may acquire and hold digital assets from time to time or long term."
Musk has long supported the popularization of cryptocurrencies — including dogecoin and bitcoin — with the most unusual form of support happening when he tweeted that bitcoin is his "safeword."
Elon Musk's links to Bitcoin add volatility to his story
An analyst at Wedbush named Daniel Ives said of Tesla's drop: "Musk is now tied to the bitcoin story in the eyes of the Street and although Tesla made a billion paper profit in its first month owning the digital gold, it comes with added risk, as seen this week," according to a CNBC report.
"With Tesla driving into the deep end of the pool on bitcoin, Musk runs the risk that this side show can overshadow the fundamental EV [electric vehicle] vision in the near term for investors."
It's hard to deny how inextricably linked Elon Musk and Bitcoin have become in the public eye, despite how many other things — like claims for SpaceX to land on Mars by 2024 — he has going on. Tesla's recent first recall was relatively modest in the industry. But when it comes to bitcoin "it's playing with firecrackers and risks and volatility are added to the Tesla Story," said Ives in the report. The same might be said about Elon Musk's slip from the first- to second-richest person in the world.
IE attends New Scientist Live and speaks with the UK Atomic Energy Authority, to learn more about the ambitious STEP program.