> [BTC mining] is often done using electricity which is effectively stolen from taxpayers with the help of government officials
Can somebody elaborate on the stolen/corruption angle?
The first four links for me are:
* 13 arrested for stealing $3million of electricity to mine BTC (China)
* Illegal Crypto Miner Caught After Stealing More Than $400k [in electricity] (Russia)
* Bulgarian Electricity Company Unveils Details of Historic Power Theft [it's Bitcoin miners]
* Bitcoin mining operators steal $1.5 million in electricity (Australia)
These are just the ones who've been caught so far.
The articles point out the value of the electricity stolen but not the gained profit. E.g., what percentage of BTC was mined with stolen electricity based on the cases we've found so far?
If only a vanishingly small amount of BTC was mined with stolen electricity then the rest of the argument kind of falls apart.
The $3 million example from China was operational for over 2 years.
> The articles point out the value of the electricity stolen but not the gained profit.
Sure. Random internet source says average Chinese industrial electricity is $0.084/kWh. So that's approx. 36 million kWh total, or average 1.4 million kWh/month (1.4 GWh/mo) during their operation.
> E.g., what percentage of BTC was mined with stolen electricity based on the cases we've found so far?
https://digiconomist.net/bitcoin-energy-consumption/ for Mar 2017 through May 2019 estimates global BTC energy consumption at 10 TWh/yr (830 GWh/mo) minimum to 73 TWh/yr (6,100 GWh/mo) maximum. Absolute lower bounds are 3.4 TWh/yr-60TWh/yr (280-5000 GWh/mo).
So, making some hand-wavy assumptions that they did not scale their operation over time, or reduce mining if prices fell, and that their ASICs were approximately as good as everyone else's, they were anywhere from 0.2%-0.5% (early 2017) to 0.02-0.03% (2018 peak) of global BTC energy consumption.
Per https://www.blockchain.com/charts/total-bitcoins the number of BTC in circulation rose from 16.193M to 17.728M (= ~1.535M) coins during that time. Just as rough bounds, 0.02% would be 307 coins and 0.5% would be 7675 coins.
https://www.coindesk.com/price/bitcoin price in Mar 2017 was ~$1200 USD, peaking in 2018 at $19,000, and $8,700 in May 2019. I don't have a weighted average for that period, but I'd approximate the average price over the period as roughly $5k. So: our extreme low estimate of 307 coins, sold immediately on mining, yields revenue of $1.5 million (on $3mil stolen electricity). On the high end, $38 million in revenue. Probably they made something in between.
> If only a vanishingly small amount of BTC was mined with stolen electricity
That is just the one operation, which got caught. It doesn't include any other illegal operations which got caught, and it does not include illegal operations which have not been caught. 0.5% is small, but significant. 0.02% is maybe less so.
This estimate of percent-BTC-produced-with-unpaid-electricity doesn't include legal operations that went bankrupt and will not be able to pay what they owe to the local utility. (There was a lot of this after the 2018 boom-crash.)
> then the rest of the argument kind of falls apart.
I don't really agree. The incentives here are all terrible and will encourage more of this going forward, especially with BTC prices astronomical again.
(1) Burn as much electricity as possible. This is just bad for society and the world.
(2) Acquire electricity as cheaply as possible. In the absence of theft, this encourages consuming electricity in locales that do not price carbon production externalities into electricity costs. Obviously, theft makes electricity even less expensive.
(3) Maaaybe you can take your stolen profits and run, because BTC is pseudonymous and freshly mined coins aren't connected to real world identities. This encourages illegal operations.
Thanks for reading :-).
It's easy to find articles about stolen electricity [1][2], but since these are both about people who were arrested it seems the governments weren't helping them.
[1] https://phys.org/news/2019-07-china-police-bitcoin-miners-mn...
[2] https://news.bitcoin.com/bulgarian-electricity-company-unvei...