Key Post Bitcoin is a clearly identifiable economic bubble

[RetirementPlan]

Bitcoin has been badly maligned on the subject so there has been no question thus far of it getting a free pass. The point is that it's entirely the opposite. It's not reasonable for anyone to hold bitcoin to a higher standard whilst not saying a word about all the other major consumers of energy and not acknowledging that they burn a higher proportion of fossil fuels comparatively.
I see plenty of kerfuffle re. bitcoin's energy use. Where's the moral outrage when it comes to the mega energy use of Google, Youtube, Netflix, Facebook, online gaming, household dryers, private jets, the gold mining industry, etc?



Nobody ever suggested that it doesn't - maybe not as much as online gaming or the conventional banking system (when all energy inputs are considered ) - but sure, it utilises a lot of energy...no question.



And now we arrive at the real issue. The consideration of whether there is utility in bitcoin and the Bitcoin network. Whenever its pointed out that some of bitcoin's energy use is via stranded and curtailed energy use, there's never a response from detractors that they would be ok with bitcoin/bitcoin mining if there was more such use. By and large, they've been opposed to the notion of it before they even considered its energy use - and that's the issue.
What is it for? It contributes towards the security of an open, decentralised, censorship-resistant global borderless monetary network - that anyone on the planet can access should they choose to do so. It seems others don't see the value in that - they're entitled to their own opinions. But putting intensive energy use via folks gaming online, watching cat videos on youtube or watching mindless crap on netflix before the provision of such a network doesn't seem reasonable to me. Each to their own.

Sure, we could certainly do with more moral outrage about energy uses or misuses in other sectors. That doesn't change the core issue about Bitcoin. The 'stranded' energy is an interesting angle. I'd be interested to know how much of bitcoin energy usages comes from these stranded power stations. What are the plans for the stranded stations once Bitcoin mining finishes? Would it make more sense to connect them to the grid now, one way or other and make the energy more broadly available?

Is it really open to 'anyone on the planet'? What level of infrastructure (mobile networks, broadband) is required? What level of digital literacy is required?

 

[tecate]

Sure, we could certainly do with more moral outrage about energy uses or misuses in other sectors. That doesn't change the core issue about Bitcoin. The 'stranded' energy is an interesting angle. I'd be interested to know how much of bitcoin energy usages comes from these stranded power stations. What are the plans for the stranded stations once Bitcoin mining finishes? Would it make more sense to connect them to the grid now, one way or other and make the energy more broadly available?

Is it really open to 'anyone on the planet'? What level of infrastructure (mobile networks, broadband) is required? What level of digital literacy is required?

The Cambridge Centre for Alternative Finance ( CCAF ) put their estimate of renewable use in Bitcoin Mining at 39% in 2020 - twice that of the US national grid. A recent Bitcoin Mining Council report puts it at 56%.
Here's an example of off-grid mining in North America which utilises flared/waste gas - LINK . Oil fields have a tendency to be in the back of beyond and away from population centres. There's no option of utilising this energy for other purposes. Into the bargain, they're reducing methane emissions for the oil company - methane being a far more potent greenhouse gas.
We're seeing the first movement from power companies directly more recently in exploring the use of bitcoin mining for the purpose of utilising curtailed power (whether renewable or otherwise) - that would otherwise go to waste.

Is it really open to 'anyone on the planet'? What level of infrastructure (mobile networks, broadband) is required?

A smartphone and access to mobile internet or wifi hotspot and the ability to install a wallet such as this one. I'm sure there are places where this may be a difficulty. However, I've lived in the developing world for a number of years - in a region where the majority get by on a monthly salary of $300. The vast majority have smartphones and mobile internet.

 

[ArthurMcB]

Ox (ZRX) spiked massively last night around midnight for just a few mins. Anyone know what would have caused this?

 

[time to plan]

Ox (ZRX) spiked massively last night around midnight for just a few mins. Anyone know what would have caused this?

Woodies mistakenly cancelled and then reinstated their Black Friday tulip bulb clearance sale.

 

[RetirementPlan]

Interesting angle today - Crypto as the new Scientology;

https://twitter.com/della_morte_/status/1468021469099737089

 

[Brendan Burgess]

 

[Brendan Burgess]

"Twice as many men invest in crypto than women"

That is not typical of my male friends. Most of them invest in women, very few of them invest in crypto.

But maybe among the younger generations, investing in crypto has replaced investing in women.

Brendan

 

[MrEarl]

Remind me to quiz you on this "investing in women" thing, when next we meet

The fact that more men than women are investing in crytos, doesn't surprise me. My feeling is that women are typically less likely to take risk, then men.

From my own network, I've been quite surprised by some of the people who have elected to invest in crytos. Few have put big money into it, relative to their overall wealth, but quite a few have put small amounts in, and most were also capable of explaining their logic, rather than just saying they thought it was a good idea etc.

 

[tecate]

Interesting angle today - Crypto as the new Scientology;

Perhaps taking a step back via the more broader perspective offered here will provide a greater insight into the part it's likely to play going forward.

 

[Duke of Marmalade]

Perhaps taking a step back via the more broader perspective offered here will provide a greater insight into the part it's likely to play going forward.

The article talks about a brave new world where currencies including crypto are freely exchangeable across the globe which somehow heralds a new geopolitical dispensation.
Nothing very clairvoyant there - we already have freely exchangeable currencies, the days of exchange controls are a distant memory.
Despite this free for all in the currency of your choice, Americans mostly use dollars, Brits sterling, EU folk the euro, Japanese the Yen etc. etc.
Besides it constructive role in hedging international trading transactions, the freedom to exchange currencies is a playground for speculators a game which at he moment is probably dominated by crypto but this will turn out to be a short term phenomenon.

 

[tecate]

The article talks about a brave new world where currencies including crypto are freely exchangeable across the globe which somehow heralds a new geopolitical dispensation.
Nothing very clairvoyant there - we already have freely exchangeable currencies, the days of exchange controls are a distant memory.

Being able to use a currency that can't be controlled by another nation state is completely different. Being able to do so directly and not have to ask permission of the international banking system is completely different. One example - the Europeans wanted to trade with Iran a couple of years ago - the European based yet US controlled SWIFT system prevented them from doing so.
Recently, the Brits reneged on making Venezuela's gold available to them (and anyone can think what they like about Venezuela's current regime - getting politically involved with a nations sovereign gold reserves in this way is in no way reasonable). Another reason for nation states not to go down the gold reserve route.
In Iraq, Hussein was looking to move away from oil sales in USD and suddenly he's toppled. The same in Libya.

Despite this free for all in the currency of your choice, Americans mostly use dollars, Brits sterling, EU folk the euro, Japanese the Yen etc. etc.

Regular people use sovereign currencies? Who has disputed that? That's the world we live in. The article was referring to larger transfers between nation states. It wasn't referring to micro-transactions or the removal of sovereign currencies on a day to day basis. Sovereign currencies remain - albeit that they will have renewed incentive to be better managed than ever before.

Besides it constructive role in hedging international trading transactions, the freedom to exchange currencies is a playground for speculators a game which at he moment is probably dominated by crypto but this will turn out to be a short term phenomenon.

This speculative angle is something you've introduced yourself - it's got nothing to do with what's raised within the article. The article suggests that crypto/web3 tech changes things up and affects the way geo-politics rolls in the future. It also refers to the dynamic of entities in the future having to share the upside with service users....something that is profoundly different to what we have right now.

 

[DazedInPontoon]

A bit of a milestone - yesterday saw bitcoin pass the point where 90% of all eventual coins are now mined. The 95% point should be reached almost exactly 4 years from now.

 

[Duke of Marmalade]

Being able to use a currency that can't be controlled by another nation state is completely different. Being able to do so directly and not have to ask permission of the international banking system is completely different. One example - the Europeans wanted to trade with Iran a couple of years ago - the European based yet US controlled SWIFT system prevented them from doing so.

All that decentralised, censorship free etc. etc. stuff doesn't float my boat at all and I think the vast majority would be like me. Very happy with the incredible facilities these days of transacting. Yes a bit worried about inflation but no way see bitcoin as the antidote to that. Myaybe there is a niche demand for those things, some of it a bit dodgy, but no way will this be a geopolitical game changer.

Regular people use sovereign currencies? Who has disputed that? That's the world we live in. The article was referring to larger transfers between nation states. It wasn't referring to micro-transactions or the removal of sovereign currencies on a day to day basis. Sovereign currencies remain - albeit that they will have renewed incentive to be better managed than ever before.

Maybe El Salvador, Venezuela, Lebanon will buy into bitcoin but US, UK, Japan, EU...? I don't think so

This speculative angle is something you've introduced yourself - it's got nothing to do with what's raised within the article.

Just pointing out the main impact of the liquid exchange control environment - hardly a geopolitical game changer. Crypto will have even less impact on the geopolitical landscape than the fax machine.

 

[tecate]

All that decentralised, censorship free etc. etc. stuff doesn't float my boat at all and I think the vast majority would be like me.

It could be that the 'vast majority' are like you - but I suppose your mileage will vary re. in what geographic location you find that majority in.

Very happy with the incredible facilities these days of transacting.

As above, mileage may vary depending upon where you are in the world. The 70% of Salvadorans who remain unbanked may not share your view. Alternatively, you could be in Ireland as a migrant worker - sending remittances back home - and not be too satisfied with the incredibly expensive remittance facilities. Maybe someone being subjected to a system that implements capital controls wouldn't share the same view.

Yes a bit worried about inflation but no way see bitcoin as the antidote to that.

Milton Friedman: “Inflation is always and everywhere a monetary phenomenon in the sense that it is and can be produced only by a more rapid increase in the quantity of money than in output".
If we are accepting of Friedman's view, then bitcoin in and of itself won't contribute to inflation (given that nobody can print more of the stuff beyond its programmed issuance schedule). It doesn't fix monetary policy choices of central bankers. However, I'd wager that it does provide a level of competition - and competition has never been a bad thing. As bitcoin becomes more embedded and ubiquitous, then I'd imagine those countries that have mismanaged sovereign currencies in the past may be less likely to do so in the future.

Maybe there is a niche demand for those things, some of it a bit dodgy, but no way will this be a geopolitical game changer.

Well, we've already had the first nation state adopt it as legal tender. A country pricing oil in btc would be an interesting development with a geopolitical element to it.

Maybe El Salvador, Venezuela, Lebanon will buy into bitcoin but US, UK, Japan, EU...? I don't think so

It depends of course on what level of buy-in you have in mind. However, there's no sign of any ban coming from any of those countries/blocks. Regulation is getting thrashed out now. A US Senate committee had a hearing this morning on Stablecoins. There was another congressional hearing on crypto last week. It's far from a one way street but there continue to be relatively positive soundings in terms of not standing in the way of the innovation at hand.

 

[RetirementPlan]

Interesting to see the overwhelmingly negative reaction to this visual indication of the vast resources being soaked up by mining;

https://twitter.com/jaxson_davidson/status/1470933731548356614

 

[tecate]

Interesting to see the overwhelmingly negative reaction to this visual indication of the vast resources being soaked up by mining;

https://twitter.com/jaxson_davidson/status/1470933731548356614

I had a look through the comments. Seems to be dominated by gamers salty because they're having difficulty in obtaining Nvidia graphics cards (gaming which of course consumes far more energy than bitcoin mining). One other expressed his surprise in the investment in bitcoin mining "just when proof of work is being eliminated".....grossly misinformed. There have been billions invested in bitcoin mining facilities already - with a long time horizon in mind re. return on investment. When China cracked down on mining, I saw estimates of it requiring 3 years for the sector to replace the lost hashrate. In 6 months, they've almost replaced the shortfall already.

 

[Duke of Marmalade]

When China cracked down on mining, I saw estimates of it requiring 3 years for the sector to replace the lost hashrate. In 6 months, they've almost replaced the shortfall already.

I don't understand the sentiment. It suggests that hashrate is a good or macho thing.
I'm not talking all that Green stuff but about the basics of what the hashrate is about. The integrity of the blockchain is determined by the 10 minutes to find the solution to the hash puzzle and that 10 minutes is kept constant. If more and more resources are devoted to mining because of the juicy rewards of new bitcoin then without a correction the integrity of the blockchain would be compromised. The correction comes in increasing the difficulty of the solution which requires a greater hashrate to find, but returns the integrity to the intended 10 minutes.
As I have said before, after a few more halvings when the rewards for actually releasing new bitcoins becomes much less the hashrate will decline dramatically but that or itself won't signal that the party is over.

 

[tecate]

I don't understand the sentiment. It suggests that hashrate is a good or macho thing.

It illustrates that there are people who have made an assessment of how this all develops and beyond that, they've had the confidence to invest significant capital - knowing that bitcoin mining is a multi-year project.
Otherwise, greater hashrate is positive insofar as it provides a greater level of network security.

 

[Duke of Marmalade]

It illustrates that there are people who have made an assessment of how this all develops and beyond that, they've had the confidence to invest significant capital - knowing that bitcoin mining is a multi-year project.

After a few more halvings the economics of mining will be transformed. I don't think most of today's investment is long term but is premised on big pay-outs continuing for a few halvings yet , provided the price stays where it is.

Otherwise, greater hashrate is positive insofar as it provides a greater level of network security.

That is the point I am challenging. It increases network security but only as a counterbalance to the increased hashrate being brought to bear because of the increased rewards. Put another way, the last time I looked the difficulty was 21 trillion times greater than originally planned - doesn't mean it is 21 trillion times more secure, because the difficulty has been countered by a 21 trillion increase in hash power.
The security essentially stays the same - at 10 mins to solve the hash puzzle.

 

[tecate]

After a few more halvings the economics of mining will be transformed. I don't think most of today's investment is long term but is premised on big pay-outs continuing for a few halvings yet , provided the price stays where it is.

So in 10 years time, are you saying that bitcoin mining will be utilising much less energy than it is today whilst bitcoin continues to scale as a network?

That is the point I am challenging. It increases network security but only as a counterbalance to the increased hashrate being brought to bear because of the increased rewards. Put another way, the last time I looked the difficulty was 21 trillion times greater than originally planned - doesn't mean it is 21 trillion times more secure, because the difficulty has been countered by a 21 trillion increase in hash power.
The security essentially stays the same - at 10 mins to solve the hash puzzle.

Until such time as the network matures, the higher the hashrate, the more secure the network is. If a nation state were to attempt to carry out a 51% attack, it's much harder for them to do so - the higher the hashrate. You mention that the algo difficulty is many times greater than 'originally planned'. Can you cite that text as I'd be interested in reading through it?