Elon Musk's Crypto Dream: Why OpenAI's $10 Billion Token Plan Failed?

Emerging internal communications reveal that Elon Musk once seriously considered OpenAI’s token-based funding model but later completely stepped back from this approach. It is clear that this decision shaped the structure of OpenAI as we know it today. The traces of the crypto world in this early period are critically important for understanding how technology leaders approached blockchain technology.

Musk’s Initially Supported Token Funding Idea

According to correspondence between OpenAI and Elon Musk, in early 2018, Musk seriously considered a crypto-based ICO model as a way to solve the organization’s financial problems. In discussions with the organization’s executives, they considered a proposal to issue an initial coin offering of approximately $10 billion. This indicated that, during that period’s crypto boom, even mainstream technology circles viewed token sales as a viable funding tool.

Details emerging from these discussions show that this idea was not entirely rejected but was considered a serious option. Elon Musk and other OpenAI founders discussed how a for-profit arm could be structured to support the nonprofit organization’s mission.

Early 2018: OpenAI’s Billion-Dollar Token Vision

As the months progressed, Musk’s stance on this matter changed. Correspondence indicates that Elon Musk ultimately did not support the crypto-based funding strategy and decided to leave OpenAI. According to statements from the founders, Musk concluded that the organization would not be able to secure sufficient funding and instead chose to focus on AI development efforts at Tesla.

The communications from this period reveal not only OpenAI’s but also the broader tech industry’s curiosity about crypto and blockchain technology. Initial coin offerings were seriously considered as a funding mechanism throughout 2017-18.

Why Did Elon Musk Abandon Crypto-Based Funding?

The turning point in Musk’s decision was concerns over OpenAI’s financial resources. Elon Musk likely evaluated that traditional investment channels providing corporate funding were more reliable. Compared to token sales, conventional capital financing appeared more predictable and regulated.

This choice reflects not only Musk’s personal view but also the general skepticism and uncertain regulatory environment surrounding crypto at the time. While ICOs initially seemed like an exciting opportunity, market volatility and regulatory uncertainties made them less trustworthy as long-term funding tools.

Impact of This Decision on OpenAI’s Current Structure

Elon Musk’s departure from OpenAI in later 2018 played a decisive role in shaping the organization’s current structure. OpenAI adopted a model combining a nonprofit organization with a public benefit corporation. This hybrid structure still forms the core of OpenAI’s organizational model today.

When the token-based funding plan was abandoned, OpenAI shifted toward more traditional corporate funding avenues. This decision supported investments in AI and positioned OpenAI as it is today.

The 2017-18 Crypto Boom: How Seriously Was It Taken Initially?

Understanding the crypto world of that period helps us better grasp the significance of this event. During 2017-18, the ICO boom was a period when startups raised billions of dollars by directly selling tokens to the public. Regulatory rules were uncertain, investor appetite was high, and rapid funding opportunities were very attractive.

In this context, Musk’s serious consideration of a crypto-based funding model was not just curiosity but a logical outcome of the era. Most technology leaders and entrepreneurs saw ICOs as a new era of financing. Musk’s brief exploration of this path for OpenAI reflected the general zeitgeist of the time.

However, abandoning this vision demonstrates that the instability and uncertainty of the early crypto scene, even for the most forward-thinking tech leaders, caused concern. As crypto funding ultimately failed, organizations continued to favor traditional methods.