Originally published 2021-02-28.
Elon Musk (left) and Bill Gates (right). Photos: AFP / Britta Pedersen; AFP / Ludovic Marin.
In February 2021, with Bitcoin near record highs and Tesla freshly announced as a major buyer, Microsoft co-founder Bill Gates urged ordinary investors to be careful. Speaking to Bloomberg, he said Elon Musk could afford Bitcoin's wild swings, but people with far less money could get swept up in a mania and lose what they cannot spare. His short version: if you have less money than Elon, you should probably watch out
.
Below we explain the context of Gates's warning, why he and Musk saw Bitcoin so differently, what happened to the price in the years that followed, and the questions worth asking before putting money into any volatile asset.
What Gates said, and why it mattered
Gates did not say Bitcoin would collapse, and he did not attack Musk. His point was about who can absorb risk. Musk, he said, is extremely wealthy and sophisticated, so the price moving up or down would not hurt him. The concern was for people who buy during a frenzy, often late and with savings they need.
The comments drew attention because they set two of the world's best-known tech figures on opposite sides. Gates, whose wealth came from software and who now focuses on philanthropy, has long preferred investments that produce something, such as companies with earnings. Bitcoin produces no income; its price depends entirely on what the next buyer is willing to pay. In later interviews he reportedly went further, describing crypto as relying on the "greater fool" theory.
He also raised the environmental cost of Bitcoin, a theme that soon became central to the debate.
Musk, Tesla and the early-2021 Bitcoin boom
On 8 February 2021, Tesla disclosed that it had bought $1.5 billion worth of Bitcoin and planned to accept it as payment for cars. The news pushed the price above $44,000. Within weeks, reports noted that the paper gain on Tesla's holding exceeded the company's entire net profit for 2020, a striking comparison, though an unrealised gain is not the same as earnings from selling cars.
Other big names were also warming to crypto. Payment companies and banks announced plans to hold, trade or offer custody for digital assets, and many observers felt the asset was becoming mainstream. That sense of momentum is exactly the kind of mood Gates was warning about.
Musk's own enthusiasm proved changeable. In May 2021 Tesla suspended Bitcoin payments, citing concerns about the fossil fuels used in mining, and in July 2022 the company reported that it had sold most of its Bitcoin, about three-quarters of its holdings.
How volatile has Bitcoin been?
Volatility is the heart of Gates's warning, and the price history bears it out. Bitcoin hit about $19,783 in December 2017, then fell below $3,300 a year later. It rose to around $58,000 in February 2021, the week Gates spoke, and dropped to about $47,000 within days.
The swings continued:
- October–November 2021: new highs in the high $60,000s.
- November 2022: a low of about $16,200 after the collapse of the FTX exchange, a fall of roughly three-quarters.
- January 2024: US regulators approved spot Bitcoin exchange-traded funds, bringing in large new inflows.
- December 2024: Bitcoin passed $100,000 for the first time.
- 2025: new records above $120,000, followed by a long slide that took the price to around $60,000 by February 2026.
Someone who bought near a peak could have waited years just to break even, while early buyers made enormous gains. Both outcomes are possible, which is exactly why the amount you invest matters so much.
The energy question
Bitcoin is secured by "mining", in which computers compete to solve puzzles and earn new coins. This uses a lot of electricity. The Cambridge Centre for Alternative Finance has estimated Bitcoin's consumption at about 138 terawatt-hours a year, around 0.5 percent of global electricity, with emissions comparable to those of a country like Slovakia.
The energy mix has shifted over time. Surveys of large miners report a growing share of renewables and nuclear power, but natural gas and coal still supply a large part. China banned mining in June 2021, pushing much of the industry to the United States, Kazakhstan and Russia. Whether Bitcoin's energy use is justified remains one of the most divisive questions around it.
Is Bitcoin useful for everyday payments?
Supporters see Bitcoin as "digital gold", a scarce asset outside government control. Critics note that it is slow and costly for small daily purchases compared with cards or instant bank payments, and that its price swings make it awkward as a currency.
El Salvador made Bitcoin legal tender in 2021, the first country to do so, but everyday use there stayed low, and the country later scaled the policy back under an agreement with the International Monetary Fund. For now, most people hold Bitcoin as a speculative investment rather than spending it.
Questions to ask before you invest
Gates's advice boils down to matching risk to your own situation. Before buying any cryptocurrency, it helps to ask:
- Can I afford to lose this money? Only use money you would not need if its value fell sharply.
- How long can I hold? Recoveries after crashes have sometimes taken years.
- Do I understand where I store it? Exchanges can fail, and lost passwords or keys can mean lost coins.
- Am I buying because of hype? Rapid price rises and celebrity endorsements are classic signs of a mania.
- Is my portfolio balanced? Many advisers suggest keeping speculative assets to a small share of total savings.
Nothing here is personal financial advice. If you are unsure, speak to a qualified, independent financial adviser.
Join the following websites and apps to get free #BTC and ways for passive income.
- Sign up with our referral link and earn up to 200 Euros in free Bitcoin to kickstart your crypto portfolio with SwissBorg with your first transfer of 50 Euros! https://join.swissborg.com/r/alkimoKOWX
- Use our referral link https://platinum.crypto.com/r/m524bfdwja to sign up for Crypto.com and we both get $25 USD 🙂
#UnbankYourself #Cryptocurrencies #PassiveIncome
Sources: Bloomberg interview with Bill Gates, February 2021, as widely reported at the time; Wikipedia: History of bitcoin; Wikipedia: Environmental impact of bitcoin.
COMMENTS