EU should ban proof-of-work crypto mining, regulator says
afr.com
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Every wafer that doesn't become bitcoin miners can become something else.
I was under the impression most of these cryptocurrency assholes are in corrupt countries where energy prices are either low or its easy to steal electricity.
The idea of banning something because of a chip shortage is an even more extreme attack on the rights of others. One person makes specialized bitcoin mining chips (they can't be used for anything else), another person buys them. And you want to bring people with guns into it because maybe the person making the chips could be making them for whatever you want? Please, think deeply before asking for force and violence to be involved in a bunch of people peacefully going about their own ways and interests.
A CO2 tax won't help when the issue is that the grids simply can't keep up with demand.
Other parts of Europe has a power surplus, but the grid's capacity simply isn't high enough to transfer all of it to the locations where it's needed.
As it turned out, the environmentalists' push to kill nuclear power wasn't that great since the plants were in the areas where the power was actually consumed.
It's a mess caused by a whole lot of varying factors, ranging from public utilities being sold out to international cartels who pocketed the income without investing in grid improvements, to the EV rollouts, to power plants being decomissioned. On top of that, you have Russia flexing their muscles, and if that conflict somehow escalates then Russian gas imports will be weaponized. I suspect the EU would like to be the ones doing the weaponizing and that means reducing the energy usage and fast.
Under those circumstances, proof-of-work crypto is simply low-hanging fruit and banning it will have a relatively large impact with a fairly small number of people being hit. People will prefer that to even higher energy prices, regardless if it's morally right or not.
Might makes right and profit is king. If you want "innovation" you must let JP Morgan Chase Stanley Rockefeller dictate the productive forces and foreign policy of the largest industrial power in the world! /s
This is fixed with off-chain transactions, which negate the benefits of using a blockchain in the first place.
The number of transactions has nothing to do with the energy spent on mining. Besides, the LN can already handle millions, if not billions, of transactions per second. You’re parrot
Where do you think the monetary system actually came from?
That doesn't have much in common with the "gold standard" monetary system as it was in the USA. That emerged from a monetary system of private banks that issued their own banknotes.
And it has practically nothing in common with the modern quantitative easing monetary system that is orchestrated by public and private banks.
But that's hardly a concern. When currencies fail, it's usually just another symptom of a deeper problem. Imagine Germany in the late 1920s with Bitcoin. There would still be mass unemployment, there would still be riots on the street, the Rheinland was still occupied, the government would still have to pay reparations, US companies would still be unwilling to continue investments in Germany. Almost none of the problems were caused by monetary policies.
And if a government destroys their monetary system with monetary policies alone, they can just introduce a new currency. That's not a apocalyptic measure.
Exactly. In that case, hyperinflation was a willed policy to get at anything of value, regardless of how destructive it would be in the long term, so that it could be shipped abroad (in this case, as war reparations). Making people dip into safe assets, trade them for rapidly worthless currency just to get by, is the whole point of hyperinflation.
Maybe an asset-rich person could get by for a while trading directly in his assets, but sooner or later they, or who they traded with, would have to deal someone who was forced to use government currency. At which point they would have to trade something valuable for something (rapidly) worthless: mission accomplished as far as foreign creditors are concerned.
Can you give me an instance of hyper (say, > 100% monthly) inflation where the government wasn't desperately paying off foreign creditors, or were otherwise desperate to ship value abroad?
I trust our proof of stake 100% more than arbitrary Bitcoin miners who mine bitcoins somewhere.
At least our normal currency has real stake like people saving money to afford a car, people working and paying of the house they life in, salaries etc
We already have a very well functional proof of stake system.
In some cases it's trauma-informed; they are, or know, people who really have experienced that kind of social collapse. It happens a lot in South America. People who grew up behind the Iron Curtain legitimately don't trust their governments either.
Yes I do. Why? Because they handled it for hundreds of years, and it works all day everyday.
> No currency in the history of the world has survived in the long run.
Yes, so?
> The number of transactions has nothing to do with the energy spent on mining.
The number of transactions is a measurement of efficiency.
> Besides, the LN can already handle millions, if not billions, of transactions per second.
Only between 2 parties, after opening a channel between them, which requires: A transaction. And neither party can use any of the funds transmitted via the payment-channel in the wider network until the channel gets closed, which requires: Another transaction.
The banking system imposes no such limitations: A transfer can be initiated at any time to any IBAN in the world, with no prior agreement, the energy cost is miniscule, and the moment the transfer is completed, the funds are available to the other party for transactions to whatever other IBAN they want.
Yeah that great depression that started in 1929 and sank the world, the stagflation of the 1980's, the crisis in 2008, the 7% inflation this year, all evidence the govt does a great job handling it
Money itself is mostly done fine. Mostly: There are exceptions, but (outside of wars) I know if only a handful of examples where governments had something less stable than Bitcoin.
I guess you could call it stable. A stable decline!
First: That, within certain bounds, is deliberate — a small level of inflation helps the rest of the economy by encouraging spending. The last thing you want is people HODLing their paycheques.
Second: your link shows an average halving time of the US dollar purchasing power of 22.5 years. Bitcoin has about the same price today as it was 6 and 12 months ago, but was about double that 3 and 9 months ago. Even the Brexit referendum’s effect on the GBP would be hidden in the noise of BTC’s volatility.
Second: Yes. No one is denying that Bitcoin is volatile. If you pick any arbitrary period of time you can come up with whatever statistic you want. This is not sound argument IMO.
Except: money stuck in savings accounts also means the money isn’t spent on goods & services, so fewer jobs are supported, so productivity goes down, which is effectively +ve inflation even with the money supply perfectly fixed, but fewer jobs also encourages more savings and also triggers a spiral.
Which effect dominates (+ve or -ve inflation) depends on other factors, but both ways are a spiral of economic pain.
2. What? This is specifically about which is worse, how can you not make this type of comparison?
> $nominal_interest + $inflation
Should either be:
> $nominal_interest - $inflation
Or:
> $nominal_interest + $deflation
Show me how to open a bank account using this monetary system that you love so much, so I can receive payments from those clients and feed my family.
With Bitcoin I can open an account from my bedroom, for free.
/u/danlugo92 wouldn't necessarily need to open a bank account. There's always the black market. Maybe bitcoin to cash is the best approach?
In some places I can yeah. Most that do accept crypto go the Binance route.
I fail to see how this is all relevant, you're just moving the goal posts now.
I think a better example of moving the goal posts would be how Bitcoin has gone from “currency", to "store of value", to "digital asset".
Do you mean to say that you are fine and dandy with your purchasing power eroding over time?
All governments eventually start tinkering with the money supply. It's all well and good that you trust your government to do the right thing, sadly that's not the case for a large portion of the worlds population. Have you seen Turkey lately? Lebanon?
> The number of transactions is a measurement of efficiency.
The number of transactions would be the same, regardless of energy spent on mining. Be it 1 joule or a million.
> Only between 2 parties, after opening a channel between them, which requires: A transaction. And neither party can use any of the funds transmitted via the payment-channel in the wider network until the channel gets closed, which requires: Another transaction.
This isn't correct. The Lighning Network isn't just a channel between two parties. It's a network of channels between participants that allows you to transfer to any part of said network. You can open a channel to someone and never close it. Why would you? There are channels that are multiple years old at this point.
> The banking system imposes no such limitations: A transfer can be initiated at any time to any IBAN in the world, with no prior agreement, the energy cost is miniscule, and the moment the transfer is completed, the funds are available to the other party for transactions to whatever other IBAN they want.
This is really looking at the current banking system with rose-coloured spectacles wouldn't you say? What about the billions of people that do not have access to banking? You don't think there's any value in those people being able to use something like Bitcoin to interact with the wider international markets?
The Euros purchasing power has remained stable even through the worst financial crash in recent history.
So yeah, I think I'll be fine.
The pound sterling has been running since 1489. https://corporatefinanceinstitute.com/resources/knowledge/fi...
I don’t think 600 years counts as long run when it comes to world history.
While the GBP value has changed over the course of 600 years, (of course it would, peoples and governments change in that same timeframe) hasn't a BTC as well?
If I sell an item worth $60,000 USD for 1 BTC, the next day the 1 BTC could be worth $40 or $50,0000 USD. Surely such volatility cannot be useful for a common currency.
"Stable coins exist" - and yes, they do - but if a stable coin is pegged to a currency, why do you not just use said currency?
I have no choice; my wages are paid in their currency, and they demand taxes in the same.
So I take on very little additional risk in using their money for everyday things.
Buying cryptocurrency, on the other hand, would expose me to a ton of new risks I'm not currently exposed to: to get remotely robbed with no recourse, that it should collapse in value by the time I would want to spend it.
It would not alleviate the risk from government at all: I can try keeping it secret from them, not declare it (which is illegal, risky, and gives additional headaches at the point I would want to spend it). Or I could let them know, which would leave me just as exposed to their old shenanigans.
[0] https://www.statista.com/statistics/881541/bitcoin-energy-co...
Assuming the power consumption for 1 BTC transaction is 1173 kWh as stated in the article, then we are off by a few orders of magnitude.
This is enough energy to run an IBM z15 mainframe at maximum configuration (~30kW consumption) for ~39 hours [0].
I am 100% certain that Visa can process more than 1.5 million transactions on such a platform in that amount of time.
[0]: https://ibm-zcouncil.com/wp-content/uploads/2020/01/IBM-z15-... (See page 88)
At the very least banks all have their own, right? And would they not want redundancy?
1.5 million might stil be a bit low though.
That's not how any of this works. Money is not stored anywhere in particular, unless we are talking about physical currency or commodities.
The entire point of a mainframe is to be able to centralize critical things (like credit card processing) that simply cannot be allowed to fail.
Most large banks and credit card processors operate their own pile of magic and then settle after the fact. It's not like VISA's IBM is the one big money bin that everything runs through.
> 1.5 million might stil be a bit low though.
In my scenario above, 1.5 million is a joke. That max spec machine could easily handle tens or hundreds of billions of credit card transactions in that timeframe.
And if you don't think inflation resistance is important, consider how many poor people have been robbed by those who just print more money and give it to their friends. It's been happening for centuries. It has destroyed whole countries just just once or twice but many times. Coin clipping to fund wars is as old as coins. So is stealing people's money at the point of a sword.
On the outside it might not appear 'efficient' when you don't have to implement all the same features bitcoin has. But if you actually try to build a system with these features, there is no better way so far.
If you truly believe that replacing that with a non-state controlled currency that does not allow for monetary control is something government will allow or is even something that the general public would want, you're diluting yourself and are way to deep into the crypto bubble.
The only reason you hear anything positive about cryptos from the general public is because they think they can make a quick buck.
In some countries, bitcoin might be better... but there's got to be ways to help them that don't involve the whole world mining.
It might not have inflation, but I suspect that if the whole world switched to CC we would still have poverty, still have slave labor type wages for some, and all the usual stuff.
Bitcoin specifically seems to have a built in regressive tax in the form of transaction fees. Even sales tax is a bit better because that has exceptions for most essentials. This punishes those who rarely ever make transactions above 100$ and rewards those who make large ones regularly.
Just be honest with what it is — a speculative asset everyone is hoping to get in "on the ground floor of". It only has value today because you can convert it to fiat, do you really think people would still use it if that were to change?
What does immutability of the underlying record have to do with fluctuations in the tokens market value?
Your point that their usage doesn’t accelerate over time is valid, but as the link notes, this is still a significant energy burden on the country and should be addressed over time. It can be worked on in parallel to efforts to curb the growth of crypto coin energy waste, so there’s no harm in encouraging reductions to both.
They have figured it out. It's becoming exceedingly difficult to find incandescent Christmas lights these days. A quick check on two of my local big box store websites shows that non-LED Christmas lights are not even available for sale. LED lights use an order of magnitude less energy, so the current energy consumption is going to be quite different.
Environmental concerns are a temporary issue & Bitcoin is moving to renewables faster than most anything else for a variety of reasons.
An outright ban is an absurd policy aimed at being punitive towards something people have an irrational hatred for. If you care so much about the environment just have reasonable energy policies such as a carbon tax and nobody would mine BTC with fossil fuels because it would be too expensive. Plus then you’re improving every other industry too instead of attacking cryptocurrency and making an insufficient impact on CO2 emissions in the process
The energy being renewable doesn't mean much if it still wastes it. It could be used for something actually useful.
Well, what else is it for? All the things to be "put on the chain" (including transactions btw.) already existed in a more efficient form.
> Environmental concerns are a temporary issue
The environment is a concern for as long as humanity exists in it. And Carbon emissions are far from the only problem Mining causes:
https://www.bbc.com/news/technology-58572385
37,000 tonnes of waste per year. That's 37,000 tonnes of electronics for which raw materials must be gathered and processed, which must be assembled, transported.
> Bitcoin is moving to renewables faster than most anything else for a variety of reasons
https://www.sfchronicle.com/opinion/openforum/article/Bitcoi...
https://ohiorivervalleyinstitute.org/bitcoin-mining-breathes...
https://fortune.com/2022/01/05/kazakhstan-internet-bitcoin-m...
https://www.marketplace.org/shows/marketplace-tech/some-stat...
And even without that: It's just a giant waste of energy. Using the Energy requirements of a nation to process less than 0.5M transactions a day, when credit cards alone process 1B in the same time?
If we have surplus electricity, we can use it to power desalination plants, lower energy prices in underserved communities or literally just pump water uphill to store it. Almost everything is a better use than burning through tons of hardware, just so computers can scream SHA256 hashes at each other.
I’d suggest reading this article by Nic Carter to get the other sides POV: https://www.newsweek.com/bitcoin-mining-americas-most-misund...
Taking that energy off the grid is literally an incentive to not add any of those solutions which we will need in the future unless we finally agree to go nuclear.
if bitcoin mining makes you suddenly notice that you want these logistical nuances subsidized, after a hundred years of never noticing, then fine, compete with the miners at energy producing sites and legislatively that way
What are you even talking about? The issue of peak vs base load/generation is known for ages and getting only more relevant for planning these days since most renewables are not constant output.
“Could,” or “are”? How many miners are doing this? How many would even want to?
It completely ignores that what Bitcoin is doing is a total waste.
Yes Bitcoin might use energy which might not could be used otherwise but it is literally better for our environment not to use this energy instead of creating heat and hardware garbage.
He also tells a lie that Bitcoin miners are happy to only consume excess energy while Bitcoin miner do the total opposite: they consume as long as it is financial success NOT as long as the energy is unused.
He even tries to make the new York Bitcoin power plant 'green' by stating that it also creates heat for the neighborhood and just bluntly ignores that this power plant consumes natural gas to calculate worthless hashes and heat.
The fact is that plenty of countries ban Bitcoin mining because it disrupts there power network, because it undermines the financial control and because what also happens that people are now able to steal power.
And yes in the USA there are people doing Bitcoin mining today and also paying for ac to cool it down and no one is doing Bitcoin mining because it's green (which it isn't) but because the energy price is lower as the hype of Bitcoin.
That's the only reason.
And it's the most shittiest reasons to burn through energy and hardware.
Fuck you Bitcoin miners fu
Even using the electricity to literally just pump water uphill would be a better use than to pump it into the blorkchain:
https://en.wikipedia.org/wiki/Pumped-storage_hydroelectricit...
And if the world is looking for something to do with surplus electricity:
https://en.wikipedia.org/wiki/Desalination#Energy_consumptio...
Considering the fact that 1/10th of the worlds population have no access to safe drinking water, this would be a far better use ;-)
and thats not an absolute for everyone.
Right now and for a few years already this is ongoing and is hurting people and our planet.
And I did put up clear arguments don't put 'i don't respect it's in my mouth. I did not say that.
I'm not saying crypto coins itself is nothing we should research but we don't need to support Bitcoin to continue researching the technology or the idea behind it.
I don't feel that bitcoin is a total waste although I do feel their development roadmap and consensus making community hamper its competitive ability, in comparison to competing crypto coins.
Sure, you're going to say it's a problem of coordination. How about I give you another problem of coordination instead. In this world there are a lot of pretty complicated things, built by smart and learned people. Problem is, there is a supermajority of less smart and/or less learned people that sometimes get to decide what other people can or cannot do.
Usually, we can see that societies that let people mind their own business are a lot richer, happier, more civilized and more ethical than societies which tell people what they can do with their time, work and money. But there is still a problem of coordination that a majority of people still haven't internalized this meta-rule, so democracies tend to meddle a lot more than they should. But such is life.
But after Covid became crystal clear, freedom is just a buzz word.
Like the massive waste of electricity and the resulting carbon emissions.
The free market doesn't care about the longlevity of the earth, because it is an externality that is hurting the collective instead of the individual participants specifically.
The same goes for labour laws, the 8 hour workday, health and food regulation etc.
But accepting for a second the premise that crypto has negative externalities - isn't it kinda stupid to focus on a very small slice of power usage and regulating it literally out of existence, instead of making sure externalities are really included in the price of electricity? Which not only doesn't destroy anything, but, you know, actually solves the problem. Instead of using the problem as a sledgehammer to do something else entirely.
This reminds me of people fighting tooth and nail to ban plastic straws. Is plastic pollution a problem? Well, yes. Is banning plastic straws helping it? Sure. Is it even remotely a sane option when considering the cost benefit of all other things you could do to fight plastic pollution?
Yeah.
The plastic straw banning was not because they are plastic pollution. The problem is the unique shape of the straw getting into the digestive system of animals, and killing them. Plastic just made these things linger longer in the environment. Paper straws have similar problems, except a lot shorter and with a chance to digest before killing the animal.
Context and opportunity costs matter.
In the US perhaps, but in many countries, these kind of concessions where only done after the state intervened in the free market. The general political climate in which this was allowed to occur happened after many socialists political parties became recognized (or threatened with revolutionary action).
While I tend to agree with you about the futility of government regulation, it’s hard to see a future where proof of work mining is done sustainably.
> While I tend to agree with you about the futility of government regulation, it’s hard to see a future where proof of work mining is done sustainably.
Just replace "proof of work mining" with "electricity consumption".
And speaking of straw man, focusing on the specific while ignoring the general is a pretty standard debate technique. I can provide sources if you want.
Electric kettles are already regulated for the sake of consumers themselves, and even so cause direct problems the U.K. power grid has to deal with: https://en.m.wikipedia.org/wiki/TV_pickup
Electricity is sold on a free market. Miners buy electricity to secure the Bitcoin monetary network because other people value a decentralized monetary network, i.e. Bitcoin, to such a price that it's worth it. Should the market value the network less then less miners will buy electricity for mining.
Do you suggest we get rid of the free market for energy?
If there weren't subsidies (& in fact, a carbon tax), I'd agree with you
But when you find something that exposes the flaws in a system, you can try to blame the thing which exposes it, or you can try to fix the system. In this case the situation is not even overly complicated. Subsidies are bad, because:
1. they waste money - everybody is paying the subsidized price, whether they need to or not
2. they utterly fuck up incentives - there's no point to invest in higher energetic efficiency (at any level) when the price is kept artificially low.
What problem are subsidies fixing? That some people don't afford paying for electricity. Well, completely novel notion: give them money and let them chose what they spend them for. Once you do that quite a few of them will realize that investing $400 in an AC with inverter is a better investment long term than just paying for more electricity to heat the home. Or a huge array of solutions that subsidies don't make just unlikely - they make plain stupid, as long as electricity is cheap.
Long term I’m all for removing subsidies but this is political suicide if done to offset the impact of crypto mining.
Crypto mining benefits an exceedingly tiny percentage of people while using massive amounts of power.
Let's assume your scenario: you want to make an industry which is competitive globally, and feel that you need to subsidize it to get results abroad. Right?
1. This doesn't apply in your domestic market. You said "competitive globally", right?
2. When it applies in somebody else's domestic market, I imagine your subsidies are intended to level the playing field, so the electricity price will be, more or less, what's in that market in the first place. Otherwise we're talking about dumping prices, which are a totally different animal, and illegal where they're not simply immoral.
3. Dumping. Sure, you can be Putin who wants to go make Germany dependent on Russian gas, so he spends 30 years pouring money and keeping prices artificially low, only to raise them when it's strategically convenient. In this case crypto yep, will benefit from the periods of low price, but I'll point you to the fact that the whole game is so much larger that focusing on crypto is like stubbing your toe on a entrance in a cathedral. You could start jumping around on one foot and cursing crypto, or you could raise your head and see there's a freaking huge thing you're living into which is made of interests which make crypto money seems like change forgotten in laundry pockets.
And then probably shy away from something you dont't understand and go back to bitching about crypto because this is something simple and makes you feel good and something gotta change, dammit!
A better policy might be to have a tax on holding proof of work coins. I hold a little bitcoin and a little non proof of work coins. If there was such a tax I'd probably just switch over to the non proof of work ones. If most people did that the price of bitcoin would crash and there wouldn't be much money in mining it hence less mining would be done.