Bitcoin Miners Flock to New York’s Remote Corners, but Get Chilly Reception
nytimes.com
nytimes.com
Why should an enterprise that requires only about 500 people to run it be able to drive up the operating costs of a company that employed about 2,000? and other such logic from "the only justified subsidy is my subsidy" camp.
>The concerns are part of a broader battle over the enormous carbon footprint of Bitcoin mining, which on a global scale uses as much energy as a medium-sized country.
>But the iconic American corporations that abandoned plants in Massena left behind the precious resource that drew them here in the first place: abundant, cheap electricity flowing from a dam in the St. Lawrence River.
So the source of the power a hydroelectric dam. That's about as low of GHG per kWh as you're going to get. "Ce qu'on voit et ce qu'on ne voit pas". If they ban these miners, like was done in some Canadian provinces, they'll potentially move to an area with higher GHG per kWh. Since mining is more location agnostic than other production services, it's natural that it be located in economically remote but low-GHG, power/energy rich locations.
Because when you make money, someone is paying you for a product or service. When someone chooses to pay you for your product or service, they are expressing a preference for that product or service over the money, and vice versa (you express a preference for the money over the product/service). Which means, that when money is exchanged for a product or service, both parties benefit. Value is created. The utility points of the universe increase.
What you're leaving out, is that "voluntary" transactions have effects on third parties who do not consent, and also true consent of those directly involved requires that they accurately and equally understand the consequences of their actions, which is often not true in real life.
I feel like there is a third issue that I have difficulty articulating, relating to the fact that people are bound to round small probabilities to zero, which means that there is an economy of scale to exploitative behavior.
Sure, those are called externalities. I was simply explaining where the idea that trade generates value comes from. So, given that, generally we presume that trade is beneficial, unless/until someone points out an externality. Which, I certainly wouldn't make the case that there aren't any here, there are. But the way you argue against this activity is by pointing to specific externalities.
> I feel like there is a third issue that I have difficulty articulating, relating to the fact that people are bound to round small probabilities to zero, which means that there is an economy of scale to exploitative behavior.
I don't think what you're getting at has so much to do with probability rounding as it does with 'coordination problems' (http://www.oxfordreference.com/view/10.1093/oi/authority.201...)
If you can come up with a logically consistent definition under which the creation of public property does not itself cause harm - I will be surprised.
Rather than use their equipment for work that's useful to humanity like Folding@Home or BOINC these mining operations are running what amounts to a foundry of space heaters trying to compute a lottery number in return for poker chips at a speculative casino.
That's reaching. Just because some people use it for that doesn't mean that's what it's designed for.
Stalin was also quite sure he knew what was useful for humanity.
You could argue that having currency transactions based on distributed trust is useful to humanity.
> You could, but no one ever seems to do a good job of [making such an argument].
Bad job by a bunch of idiots. Some of them get paid by the system, most are high calibre and can milk the teat of corporate inquisitions. They absolutely know their subject material, so it comes down to opinion....
or
Bad specs from a bunch of profiteering idiots?
Why would anyone who was ahead of the curve ever give this stuff away? The path for Bitcoin and all other cryptos actually lies far away from the 'internet money" crossover dilemnas we have today. Big blocks of silicon heating snowdrifts is already out of date
Linking a currency to wasted energy isn’t great, but what solution would you put forward? A few countries out there have tried to go back to gold or use their oil but it doesn’t end well for them
Which is why USD backed up by the worlds strongest economy are used for vastly more international transactions than all cripto coins combined. Coins have nothing but belief in their value backing them up and are thus extremely unstable.
At the end of the day people need to pay taxes and debts and that’s what gives nation states currency value. As long as the nation does not go on a long term printing spree things stabilize.
In what sense do you believe USD to be 'backed' by the US economy?
Indirectly, messing with your currency risks economic harm creating a huge incentive for governments not to do that while things are going well.
That is absolutely correct. But nowhere does it demand that you conduct these transactions in USD. USD ends up getting used because it's convenient, which is because people have to pay their tax debts at the end of the year. However, that is a problem that can be trivially solved by software now, especially as society becomes more and more cashless.
As long as the US government accepts payment for taxes in USD, there will always be some demand for it. However, there is nothing actually stopping people from using other currencies for their normal transactions, which would substantially decrease demand for USD, and thereby reduce its value.
There is no sense in which the US government 'backs' dollars, except insofar as they are incentivized not to do anything to actively destroy them.
So, if by ‘some’ you mean multiple trillions of dollars of demand every year then ok. But, that’s rather trivializes what a trillion dollars means.
Which is why I am saying the economy backs the USD not the government.
True, though that's simple enough to hedge.
> So, if by ‘some’ you mean multiple trillions of dollars of demand every year then ok. But, that’s rather trivializes what a trillion dollars means.
Absolute numbers don't matter, relative ones do. The demand may go to trillions, but that would be down from tens of trillions.
Even record setting sustained inflation of say 2% per month in the middle of some horrific economic issues would still be a bastion of stability relative to many currency’s throughout history. So, as long as the economy stays steady and the USG does not do something monumentally stupid the US economy really does back the USD.
But nowhere does it demand that you conduct these
transactions in USD.
USD ends up getting used because it's
convenient
Why would anyone bother taking their money, going through all the steps to convert it into the foreign currency or software tokens that they need to buy from someone else (who's siphoning wealth from you) just to find out merchants don't even accept it due to the volatility. And what happens when the merchant turns out to be a fraud? No customer protection by design.
[1] https://steamcommunity.com/games/593110/announcements/detail...
I'm arguing that USD is not backed by the USG in any meaningful sense. Not that Bitcoin is a good alternative. Just that the "Bitcoin isn't backed by anything, but USD is" argument is unsound.
> Why would anyone bother taking their money, going through all the steps to convert it into the foreign currency or software tokens that they need to buy from someone else (who's siphoning wealth from you) just to find out merchants don't even accept it due to the volatility. And what happens when the merchant turns out to be a fraud? No customer protection by design.
Are you arguing that volatility is an inherent property of cryptocurrencies? Because if you're not, then I don't see why your point here is relevant. If you are, then i'd like to hear that argument spelled out.
Govt can be terribly naive.
On the micro level the issue often stems from municipal power contracts. Some towns pre purchse their expected power needs collectively to lower cumulative costs. Bitcoin miners can upset this balance and drive up costs per kWh across the whole town, making them unpopular locally.
Given the trend the last few months, I’m not sure “soaring” is the adjective I’d choose...
Chobani was one of the few that has helped the economy (through support for the local dairy industry, see https://magicvalley.com/news/local/chobani-not-a-windfall-fo...) but others such as the large-scale wind farms across the region use hundreds of workers from elsewhere to build and maintain the turbines, and don't have many permanent local jobs (http://northcountrynow.com/news/hopkinton-wind-advisory-boar...)
The New York Times should have dug into the claims from the Bitcoin miners about job creation ("Coinmint told state officials it would eventually employ 150 people in Massena") as it looks like (based on the descriptions of Coinmint's existing ops) there are only a few people needed to manage what they already have, they are not committing to any large-scale building projects, and much of the mining gear is imported.
Local news orgs have more reporting about the bitcoin miners and the impact on the region:
http://northcountrynow.com/business/blockchain-industries-pu...
http://www.northcountrynow.com/letters/snake-oil-alert-block...
Incidentally, this area is quite beautiful and cheap to live and run a business in. In many of these small cities you can buy a really nice house for $100,000-$200,000. It's about two hours south of Ottawa, a bit further to Montreal and Syracuse, and includes the northern part of the Adirondacks as well as the St. Lawrence River, Lake Ontario, and Lake Champlain region. The college town of St. Lawrence University is Canton, located in St. Lawrence county, and there are state colleges in Potsdam and Plattsburgh. A few cities have set up economic development zones and incentives for companies to relocate there including Ogdensburg, which sits next to one of the bridges to Canada, and I believe Watertown NY, as well.
Lovely piece of Americana, imo
It's hard to support when it's so wasteful of a critical resource.
Are they trying to go proof of stake?
At this point, that would be impossible. Making even minor changes to the Bitcoin protocol effectively requires the consent of miners, as they're responsible for minting blocks. There's no way that entrenched mining interests would agree to a protocol change that cut them out of the picture.
It might be technically possible to change the bitcoin protocol, but at this point the politics are insurmountable.
Bitcoin isn't like your average software where some party releases an update that magically downloads from some app store. It's a protocol where everyone has to mutually agree to update.
The best example of an "update" is Bitcoin cash, where the creator just gave all bitcoin owners free btc.
Ultimately, the real problem is that most people involved either don't understand economics, or are preying on people who don't understand economics. Until there's real commerce with a cryprocurrency, they have no value. Thus anyone hoarding them is basically gambling in a zero sum game.
All the energy consumed by bitcoin is a feature, not a bug. The only way to defeat the immutability of the bitcoin blockchain and do naughty things would be to expend _more_ energy than is currently being used (or create a more effecient miner, mass produce it, set up mining farms, all without anybody finding out).
And presumably the energy cost correlates to the usage of the currency?
How can it possibly become anything like widely used if it's so pricey?
(Come to think of it, one way is the lightning network. Which doesn't use the blockchain for almost everything: https://lightning.network/)
A single bitcoin may be pricey, but fortunately there are eight decimal places after that first coin, enabling users to spend however much or however little they want.
You're right about the lightning network, it stands to revolutionize the bitcoin network by providing an instantaneous zero-confirmation payment layer on top of the bitcoin blockchain. Critically, though, it wouldn't work at all without the security provided by all that "wasted" electricity. Think of the lightning network like the HTTP protocol layer resting on top of the TCP/IP communication layer. HTTP wouldn't work without TCP/IP and TCP/IP wouldn't be nearly as useful without the myriad of protocol layers which it enables. This is still early times for bitcoin, and you ain't seen nothin' yet.
And I expect the transactions per person of the global banking system is orders of magnitude higher.
Energy use per transaction for Bitcoin seems much, much higher, but I don't have numbers obviously.
But hopefully lightning helps.
The peak energy cost is limited by the price of bitcoin though.
If you didn't want people moving in and using your cheap electricity, you shouldn't have made it so cheap! Price stabilization in action.