Bitcoin in a hyperbolic bubble

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tecate said:
Could one unit of HFs new currency be redeemed for the equivalent in electricity?
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That is my understanding. In fact the real zealots wanted its name changed from the dollar to the Kw/hr. There was even a theory that since energy was becoming more and more efficient in producing goods and services there would be an inbuilt appreciation in the currency against a basket of goods and services. Now IMHO that is not a good thing for a currency. As to whether it would have prevented WWII, I would not like to speculate.
You reminded me earlier on in this thread of Nouriel's big faux pas, his overestimate of the Tether issue. It was a big, big let down for all his fans including yours truly. Not that Tether come out as crusaders in pursuit of the end of all wars ala prophet Henry.
Nouriel's main tenants remain intact. Btc is not a currency. It is not a medium of exchange. It is not a unit of account. It is not a numeraire. It is not a store of value. It is a bubble. I know its repetitive but no apologies.
 
WolfeTone said:
No, they can't. But Icelandic mining operations can.
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Bitcoin mining is now a big business in its own right. There are entities with operations in different world regions. Even if relocation is an issue for one company, it makes no difference. If they get out of the business, they create an opportunity for someone else to enter the market elsewhere.
That's not what I said. With the upsurge in the market, the same old tired arguments are being dragged out once again. Included amongst them is this claim that bitcoin is boiling the oceans. It's in response to that - that corporates are currently considering bitcoin relative to ESG policy.
Consider this. Tesla attracts an environmentally conscious customer base and to my point, it could get past this complete FUD and put btc on its balance sheet. If it can, then this false environmental narrative isn't going to be the reason others don't.

That's complete rubbish. There's no earthly way that he didn't foresee the energy consumption requirement when you consider that he designed it in! As regards consideration of energy use back then, it's quite the opposite. Back then the narrative was that we were about to run out of oil. Nobody talks about that now (as fracking technology came along).

Duke of Marmalade said:
That is my understanding.
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Based on what? Can you please provide a link to the info that has led you to that understanding?
 
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tecate said:
Based on what? Can you please provide a link to the info that has led you to that understanding?
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It is difficult to get detail on Henry's proposal. This short article in Chapters 5 and 6 makes it clear that the currency could be exchanged for electricity rather than it was produced by electricity.
Why is the community to shoehorn this false narrative of fulfillment of the vision of prophet Henry?
 
Duke of Marmalade said:
Chapters 5 and 6 makes it clear that the currency could be exchanged for electricity rather than it was produced by electricity
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Forgive me for being so naive here, but isnt that what we do today? The electricity people supply my household with electricity in exchange for my €'s.

I'm not sure that is what HF had in mind.
 
WolfeTone said:
Forgive me for being so naive here, but isnt that what we do today? The electricity people supply my household with electricity in exchange for my €'s.

I'm not sure that is what HF had in mind.
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No, no, it is quite different. You don't know what the electricity people are going to charge you in €s in the future. If, heaven forbid, the ECB were to print a trillion of € it might be that the electricity people would demand more of them!

It is an interesting idea. By definition your currency would keep pace with the price of electricity. On the front (or back) of your kw/h note it would say "I promise to supply you with x kw/h on presentation of this note", signed The Duke of Marmalade, President of the Electricity Currency Board.
That might actually be deflationary if other goods and services become cheaper than electricity to produce.

I can see lots of practical pitfalls but in any case I think the current arrangement is superior where the central bank has a price target in terms of all goods and services and not rigidly to just one.

Of course, 100 years ago it would have been extremely farseeing of Henry to appreciate that a currency does not actually need an intrinsic backing, and he didn't appreciate it.
 
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Yes, I get that @Duke of Marmalade , what I don't get is why?
The gold standard already existed and performed the function that HF was proposing with electricity?
What was he trying to resolve that the gold standard could not?

There is something else at play with HFs idea. He spoke of the "electrification of everything".

In the "electrification of everything", HF is, to my mind, tapping into a different concept than the gold standard. A concept where everybody has access to the supply to generate their own income (or not) from their own endeavour. Kind of what we have now, but prices measurable in the electric standard. There would be no redeeming your currency for electricity as everyone will have access to the supply of electricity, unlike the supply of gold.
 
Ostensibly it was to stop wars. He argued that all wars were because of the gold standard as it made gold a strategic asset and therefore encouraged geopolitical struggle for control of it. He argued that most countries in the world had autonomous access to electricity supply and there could not be geopolitical domination of that resource.
I don't think I go along with his argument or even fully understand it. I am sure gold started wars but then by 1939 we were off the gold standard.
 
Duke of Marmalade said:
He argued that most countries in the world had autonomous access to electricity supply and there could not be geopolitical domination of that resource.
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Indeed, but I think he was going further. Not only autonomous access at nation states level, but right down to the individual - "a new era of civilisation".
 
Duke of Marmalade said:
Nouriel's main tenants remain intact. Btc is not a currency. It is not a medium of exchange. It is not a unit of account. It is not a numeraire. It is not a store of value. It is a bubble. I know its repetitive but no apologies.
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Nouriel has been wrong about bitcoin at every point between $13 dollars and $50,000. If NYU had any sense, they'd pay him his severance and be done with him.
It's not from Henry Ford's scheme but no matter. Whether it was based on input or an actual claim on energy, my view remains the same. I recognise the energy input whereas you choose not to. We'll park it up at that.
Duke of Marmalade said:
Of course, 100 years ago it would have been extremely farseeing of Henry to appreciate that a currency does not actually need an intrinsic backing, and he didn't appreciate it.
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The very same as you did with Satoshi, you're trying to contrive their views to meet your own narrative. We know that he understood the conventional system to be crooked based on what he stated. We know that the centralised aspect of his scheme led to the powers that be frustrating his efforts.
 
Dublinbay12 said:
If that be the case why is any mining done in china today when cleaner energy sources are available in other locations?
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I don't know, probably something to do with economic viability?
Cleaner energy sources are one thing, cheaper energy sources are another.
Probably a reason why China has is competing with the US as the largest manufacturing country in the world - cheap, albeit dirty energy sources.
 

Ok thanks for recognising BTC mining isn't a zero sum game.
 
In my view it is a zero sum game, since the mining reward is fixed regardless of the number of miners or how much energy they are choosing to expend.

If miners are mining in China it's because they have a good reason to do so. It might be access to energy that is cheaper, or as cheap, as elsewhere, or it could be be because they have more efficient hardware than other miners and enough reasons not to re-locate where energy is cheaper.
 
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I was referring to the indications that BTC mining is fungible and will move to the cleanest energy sources. I am referring to statements made on here about BTC mining hardware going to remote parts of Russia and the network operating almost as not for profit.

There is an economic benefit from mining and those running the mining operations have an economic benefit to maintain their mining operation in China. As one poster mentioned, the chinese military could not even stop these mining operations, so I doubt a few Greta Thunbergs could either.

The rhetoric on here at times is that BTC network transcends human nature and economics, which I believe is a misguided belief. The proof is in the pudding so to speak as all the touted alternative mining solutions posted here have not done anything to democratize the mining power away from a centralized operation out of china.
 
The economics of mining are such that generally, in the long run, the most efficient miners will put all other miners out of business - by which I mean the less efficient miners have the choice of not mining, or spending more to mine than they make.

If energy is actually significantly cheaper in Iceland than everywhere else, and there are no significant additional operational overheads to mining there, then over time the Iceland miners should increase their mining capacity until it's close to the point that it is no longer profitable to do so. If they do this then it is no longer profitable to mine elsewhere. At this point the Chinese miners have three choices:
- move to Iceland.
- exit mining and sell their equipment to Icelandic miners (so the mining moves to Iceland in this case too)
- continue mining at a loss in China.

This is a simplified view, and in reality there is more nuance that may mean miners do not do what is most efficient for them of course.
 
That proves the point though that cheap green energy sources are not plentiful. Most of the bitcoin is done in China using dirty means as is most manufacturing, but at least manufactured goods are useful, essential products that by and large we can't do without, bitcoin is not essential, we can live perfectly well without it.
Surely we should be using green energy like in Iceland for essential useful product, surely using icelandic energy to split water for hydrogen production rather than bitcoin is where we should be at. Bitcoin is just an artificial accounting token not an essential good
 
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joe sod said:
That proves the point though that cheap green energy sources are not plentiful.
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If you think that there isn't enough available to power the bitcoin network, that's an issue for those concerned with the network then. Let those stakeholders worry about that.

joe sod said:
Most of the bitcoin is done in China using dirty means as is most manufacturing,
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See the chart I posted a couple of days ago. Bitcoin mining is in its infancy but already it has a far higher green energy concentration than other activities.

joe sod said:
but at least manufactured goods are useful, essential products that by and large we can't do without,
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Essential? You mean all that cheap, plastic crap that is bunged into containers and sent to N.America and Europe? You say its essential? I say that the current monetary model encourages rampant consumerism - resulting in people buying a whole load of crap that there's no way in the world they need. This - is at the heart of the energy debate - not bitcoin mining.
Over and above that, see my post from the weekend with the comparison of btc mining energy use vs. gaming. You talk about what is essential. How is gaming essential? It uses a hell of a lot more power than btc mining. Furthermore, btc mining is far more progressive in utilising far more green energy sources than gaming (and as far as I can see, most other activities).

joe sod said:
bitcoin is not essential
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I'm sure horse and cart owners said the same thing when car use was at an embryonic stage.

joe sod said:
we can live perfectly well without it.
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If you want this inequitable financial and monetary system to continue in its current form, that's your business. I don't. Henry Ford identified these shortcomings 100 years ago already. Change has been a long time coming.

joe sod said:
Surely we should be using green energy like in Iceland for essential useful product,
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What's this "we" business? How much have you invested in green energy infrastructure? Bitcoin mining is a tough business - that now requires major investment and a commitment to that business over the longterm (if those guys are ever going to see a return). They're stumping up their own money to fund these projects. Therefore, why should you have a say in that?
You can claim that its boiling the oceans yet anyone who claims that - do you see them calling for gaming to be outlawed? Do you see them calling for people to stop watching cat videos on youtube (youtube in isolation accounting for a horrendous amount of energy use)? Cat videos and gaming are essential too, right?....whereas the global, permissionless, uncensorable, real-time final settlement system that is bitcoin isn't. Makes complete sense.

The reality is that the people who roll out this argument are diametrically opposed to bitcoin. If they weren't they would suggest we're ok with it if it uses wasted/stranded/renewable energy. But that's never the line that's taken.
 
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Duke of Marmalade said:
You flatter it. Bitcoin is a Bag Of Hot Air using gazillions of electricity to stay Hot.
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If you're going to vent Dukey, then let me throw in that over the course of each of the 4 years that you've come out with statements like that, the network effect of bitcoin has grown year on year.
 
joe sod said:
at least manufactured goods are useful, essential products that by and large we can't do without,
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I would have to disagree. The vast, vast majority of manufactured goods are not essential and by and large we could do without.
For eg, I had a perfectly good working TV a couple of years back but there was an offer on a smartTV, with a larger screen etc, so I bought it. The old TV had no, to little resale value, so to the dump it went. Probably some octopuss or dolphin choking on its broken down parts now.
On a larger scale, after Covid, who could honestly say that all those air polluting foreign trips are 'essential'. Essential to the tourist industry, but not essential for the survival of the human species on planet earth.
 
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