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Comment by rwallace | Hacker News Reader

On the contrary, mining does create value, by creating a demand for computing power therefore financing the development of more advanced lithography, one of the very few areas in which our species is still making substantial progress.

Now if they were getting the electricity by burning coal, a case could be made that the environmental harm outweighs the benefit. But getting it from a renewable source also expands the economies of scale on that renewable source just a little more, so it's a win across the board.

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>On the contrary, mining does create value, by creating a demand for computing power therefore financing the development of more advanced lithography

This is like saying hurricanes create value because they create demand for construction

Or Frederic Bastiat's "Candlemaker's Petition", which was a satirical request that officials block out the sun in order "to encourage industry and stimulate employment".

http://bastiat.org/en/petition.html

This is an "apart from that, Mrs Lincoln" - there is no analogy, because you're leaving out the destruction caused by hurricanes, which is their overwhelmingly most important result.

By that definition destroying CPUs is also creating value.

Sure, if you spent a million dollars buying CPUs and destroying them, that would create value. In practice, there are always ways to spend a million dollars to create more value (e.g. buying CPUs and using them to do useful computation!), so nobody does that.

If you have something more useful to do with the wind-generated electricity, the same thing would apply. But thanks to the limitations of the grid and the intermittency of renewable energy, that may not be the case. In that case, mining cryptocurrency may be the highest value thing you can do with it.

> In that case, mining cryptocurrency may be the highest value thing you can do with it.

Wow, how convenient that the thing you like is the single "highest value thing" that anyone can do with energy.

You are in a filter bubble of people patting each other on the back for wasting energy. You've been rewarded for cryptocurrency speculation for so long that you've forgotten what productive work is.

As it happens, this guess is incorrect. I've never been involved in cryptocurrency other than as a curious spectator. I have no strong feelings about it one way or the other.

Do you agree with the general principle that when the heuristics you are using, generate erroneous conclusions, it's a good idea to re-evaluate those heuristics?

> Sure, if you spent a million dollars buying CPUs and destroying them, that would create value.

Can you read what you've just written and see how mad it's become?

The converse of what you've said is that making CPUs destroys value, and by implication Moore's law and the whole process of technological improvement is destroying value.

This is even worse than the Bastiat "broken window fallacy": http://bastiat.org/en/twisatwins.html

You're not reading what I've written.

But I was waiting for someone to bring up the broken window fallacy. The answer is that the unspoken assumption on which it is a fallacy is that resources in the economy are otherwise optimally employed. Back when it was coined, that might have been close enough to the truth to be a useful approximation. Today, it's very much not.

I don't think this argument has become particularly constructive, so I'll let you have the last word, but I suggest instead of just pattern-matching what you think I said to something you've heard somewhere else, try stepping back and just looking at the facts as they are.

You're confusing 'economic stimulation' with 'net value creation'.

A lot of money can change hands, and a lot of people can 'do stuff' with nobody being better off.

Take for example how the GDP is measured: the total value of 'everything produced and sold' PLUS government spending.

Get that: it does not matter how the government spends - it counts towards GDP.

A government could borrow $1 Billion dollars - and literally burn it - but the 'GDP' would be +$1B Billion that year. That doesn't mean $1B in economic value created ... it just a number on a page.

> Take for example how the GDP is measured: the total value of 'everything produced and sold' PLUS government spending.

That's incorrect; GDP is the total cost of everything produced and sold. Government spending isn't added (if it was, there'd be a substantial double counting, because a lot of things produced and sold are bought by government.)

(More precisely, it's private consumption + private investment + government spending + government investment + exports - imports.)

No, I'm pointing out how this does in fact cause net value creation. Sure, when somebody mines Bitcoin, the dollar value of the Bitcoin is purely on paper. When they send dollars to chip manufacturers to buy mining hardware, the movement of dollars from one bank account to another is also purely on paper. But when people respond to the movement of those dollars by building more advanced chip factories, that is indeed net value creation.

That is not 'value creation' - that is 'digging holes and filling them'.

The 'innovation' created from 'more advanced tech' to do something entirely useless is not really 'value creation'.

Now - if those 'advanced shovels' end up being used for other purposes, you might argue there is 'value creation' - but no - this is not right.

Why? Because of the distortionary effects of the impetus of the innovation in the first place.

If there is a 'real reason' to make 'better shovels' - then they will get created for that reason. But because they are being created for a non-reason - i.e. digging holes and filling them, well, it's a misallocation of resources.

If the 'false impetus' did not exist, that investment would go elsewhere, and create value for society in more efficient ways.

It's pointless to invest in things that have no value, because there might be indirect innovation elsewhere - just use the money for rational, value creating things - it's much more efficient.

> If the 'false impetus' did not exist, that investment would go elsewhere, and create value for society in more efficient ways.

Actually no, it probably wouldn't. Most likely, the money would be hoarded and the people would be eking out an existence doing some miserable make-work. The unspoken assumption behind your position is that all resources are currently being used fully and optimally. Unfortunately, this is very far from true.

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