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Crypto Bubble

Any other investment discussions eg. peer to peer lending
JohnB
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Re: Crypto Bubble

#388581

Postby JohnB » February 22nd, 2021, 12:02 am

At its current value ALL electricity in the world could be used to mine bitcoin profitably. It will just bring forward the 21 billion bitcoin target date. The computations required per coin is revised upwards every fortnight to slow their production, but at the moment the value of bitcoin exceeds its energy cost by a wide margin.

The only way to stop mining is to make it unprofitable by raising energy prices or reducing calculations/kWh. Or by making it illegal to force a devaluation. Do you think countries won't do this as rolling blackouts start when everyone just makes computers to work on the project.

If someone paid you to leave your taps running, so it more than paid your water bill, would you do it?

I've invented FootCoin which you can get for so many feet placed in my garden. As FootCoin rises in value, how do you stop every animal in the world having its feet chopped off. When will human feet appear?

JohnB
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Re: Crypto Bubble

#388586

Postby JohnB » February 22nd, 2021, 12:40 am

Currently mining returns 215% profit on electricity used if it costs 12p per kWh. Could you make money on your tarrif?

https://www.cryptocompare.com/mining/ca ... gPoolFee=1

Obviously depends on many asumptions which the calculator allows, but that's a huge arbitrage lever

Urbandreamer
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Re: Crypto Bubble

#388597

Postby Urbandreamer » February 22nd, 2021, 7:33 am

JohnB wrote:The only way to stop mining is to make it unprofitable by raising energy prices or reducing calculations/kWh. Or by making it illegal to force a devaluation. Do you think countries won't do this as rolling blackouts start when everyone just makes computers to work on the project.


In the first place, most* rolling blackouts are not due to bitcoin mining. The blackouts currently happening in Texas certainly are not.
In the second place, why attempt to stop it?

Seriously. Aluminium smelting takes large amounts of electricity. Guess what. The original hydroelectric dams in Scotland were built by private companies to supply other private companies that smelted Aluminium in the 30's.

https://www.ice.org.uk/what-is-civil-en ... 0in%201934.
Hydroelectric generation in Scotland started early in the 20th century – kickstarted by the need for power to drive aluminium smelting plants at Kinlochleven and Lochaber in the Highlands.


Why not allow private individuals to finance wind farms to supply the electricity needed? Oh that's right, you can buy shares in TRIG, Vestas et-al here can't you.

*To be fair, I can think of an example of a country that not only heavily subsidised it's electricity to the point that it's virtually free (less than 100th the cost of US), but also had a currency that was worthless. They did have rolling blackouts, electricity rationing and a lot of bitcoin mining. Then again, who was responsible for both the currency and the price of the electricity?

JohnB
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Re: Crypto Bubble

#388605

Postby JohnB » February 22nd, 2021, 8:13 am

Aluminium is very useful, even gold is somewhat useful, though its main purpose is being guaranteed rare.

Economics has a concept of externalities, impacts of economic activity that are not reflected well in the price of items. If you cannot accept that a key externality of Bitcoin is climate change due to its power demands, and that is a bad thing, we have no common ground.

Bubblesofearth
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Re: Crypto Bubble

#388610

Postby Bubblesofearth » February 22nd, 2021, 8:40 am

Lootman wrote:There is a bit of a contradiction there, however. Since governments have "no control over it" then they are unable to stop its use becoming more widespread.


There is a ceiling on how widespread it's adoption can be if countries retain their own currencies and Governments demand tax payment in those currencies. In some ways it makes Bitcoin a bit like gold except that central banks hold gold reserves and gold has been around for quite a bit longer than Bitcoin and someone can't come along and say try this metal instead.

I would change my opinion on Bitcoin if central banks start accumulating them.

It is rather like the way that the US dollar is common currency in a number of developing nations where, for a variety of reasons, the people there do not trust the government, nor the local currency that it issues and routinely debases.

In fact I don't think I have ever had US currency refused as payment in a third world nation, and it was not unusual to get better value than offering to pay in local currency.


The dollar is backed by the US Government (and ultimately the tax base of the US). Bitcoin is not.

BoE

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Re: Crypto Bubble

#388675

Postby Leif » February 22nd, 2021, 11:30 am

JohnB wrote:Aluminium is very useful, even gold is somewhat useful, though its main purpose is being guaranteed rare.

Economics has a concept of externalities, impacts of economic activity that are not reflected well in the price of items. If you cannot accept that a key externality of Bitcoin is climate change due to its power demands, and that is a bad thing, we have no common ground.


I agree. We are trying to fight climate change, so saying “This investment only uses half the energy of gold mining” does not hold water since it is non essential and ultimately the motivation for its use is greed. Also that article ignored energy use associated with Bitcoin transactions, which is far higher than for traditional currencies, not that Bitcoin is a currency.

scrumpyjack
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Re: Crypto Bubble

#388679

Postby scrumpyjack » February 22nd, 2021, 11:41 am

There is a strong argument, IMO, for western governments to tax them. Where there is a will, I'm sure they can find a way to levy a transaction tax on them. Governments do need to discourage cryptos. The longer they leave it, the more difficult it will be to puncture the bubble without causing massive instability.

Governments have intervened in the past to discourage people trying to hold value in asset types they don't control. For decades it was illegal in the US for private citizens to own gold.

Urbandreamer
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Re: Crypto Bubble

#388688

Postby Urbandreamer » February 22nd, 2021, 12:01 pm

Leif wrote:
JohnB wrote:Aluminium is very useful, even gold is somewhat useful, though its main purpose is being guaranteed rare.

Economics has a concept of externalities, impacts of economic activity that are not reflected well in the price of items. If you cannot accept that a key externality of Bitcoin is climate change due to its power demands, and that is a bad thing, we have no common ground.


I agree. We are trying to fight climate change, so saying “This investment only uses half the energy of gold mining” does not hold water since it is non essential and ultimately the motivation for its use is greed. Also that article ignored energy use associated with Bitcoin transactions, which is far higher than for traditional currencies, not that Bitcoin is a currency.


Unfortunately the same argument can be made for ANY banking or currency. Or art or entertainment.

For example, those who dislike bitcoin often mention Visa in the same sentence.

Have you considered what Visa are currently doing?
https://www.forbes.com/sites/billybambr ... 264a7f401c

After partnering with 35 various bitcoin and cryptocurrency platforms in recent years, the credit card company has announced it plans to help banks roll out bitcoin and cryptocurrency buying and trading services with a Visa crypto software program, set to launch later this year.


So, possibly we should ban Visa, for climate change reasons (it uses electricity too) and because it makes money.

JohnB was right though on one thing. We HAVE no common ground.

I've repeatedly pointed out how there need be little or no environmental impact. Here I'll do it again. This company captures methain that would be flaired off and uses it to mine bitcoin.
https://www.upstreamdata.ca/

Yet some think any efforts in that direction should both be ignored and roadblocks put in the way. Why? Well I suspect that the answer has nothing to do with the environmental inpact of cyptocurrencies.

Do you claim that Playstations are essential? They consume more energy than bitcoin.

JohnB
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Re: Crypto Bubble

#388704

Postby JohnB » February 22nd, 2021, 12:48 pm

I have marked Urbandreamer as a foe.

Lootman
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Re: Crypto Bubble

#388771

Postby Lootman » February 22nd, 2021, 3:46 pm

Bubblesofearth wrote:
Lootman wrote:There is a bit of a contradiction there, however. Since governments have "no control over it" then they are unable to stop its use becoming more widespread.

There is a ceiling on how widespread it's adoption can be if countries retain their own currencies and Governments demand tax payment in those currencies. In some ways it makes Bitcoin a bit like gold

scrumpyjack wrote:There is a strong argument, IMO, for western governments to tax them. Where there is a will, I'm sure they can find a way to levy a transaction tax on them.

Governments have intervened in the past to discourage people trying to hold value in asset types they don't control. For decades it was illegal in the US for private citizens to own gold.

The problem with trying to tax bitcoin is that it is by definition portable and anonymous. In fact that is part of its attraction. So taxing it will have the same problems as trying to tax things like physical gold or diamonds. Part of the attraction of holding gold or diamonds, and for that matter bearer bonds and cash, is that for the most part nobody knows you have them.

So even when the US banned private individuals from owning gold, plenty of people held gold anyway. They just kept quiet about it. And banning it can actually make it more valuable and desirable, as it signifies an over-reaching state.

airbus330
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Re: Crypto Bubble

#389040

Postby airbus330 » February 23rd, 2021, 9:18 am

So the Bubble might just be popping. :shock:

moneybagz
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Re: Crypto Bubble

#389108

Postby moneybagz » February 23rd, 2021, 11:42 am

Early warning signs of a crash (big daily drops in Tesla, Cryptos).....this could get interesting!

A well balanced view of bitcoin from Ray Dalio:

https://www.bridgewater.com/research-an ... of-bitcoin

JohnB
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Re: Crypto Bubble

#389116

Postby JohnB » February 23rd, 2021, 11:58 am

That profit ratio I mentioned a day ago as 215% for mining if you could pay $0.12/kWh, with the drop in bitcoin its now 132% (https://www.cryptocompare.com/mining/ca ... gPoolFee=1)

If it drops to zero, logically all the miners would stop, and load would come off the grid. Wow says National Grid, that 50% of our power we are obliged to supply to miners is now in oversupply, grid frequency is climbing fast, can we cut out suppliers before transformers blow.

I'm obviously overstating this for effect, but in an arbitrage world, its the kind of lunacy you get. Do we really want our power grid tied to the value of a virtual currency. Clearly the same kind of surges go with gold mining, but the hysteresis is large for a gold mine, and few worry if a mine closes for a few years. We have controls on share flash trading, but no-one dies if a stock is suspended. It seems a very bad idea to tie power consumption to forex.

Urbandreamer
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Re: Crypto Bubble

#389138

Postby Urbandreamer » February 23rd, 2021, 12:27 pm

As JohnB has marked me as a foe, he won't read this.

However with respect to his last post, presumably grid frequency fluctuations and energy demand will correlate with bitcoin prices.

Strange that it's so difficult to phrase a google search that throws up any answers or evidence.

This link did pop up, though it's nothing to do with the above.
https://www.iea.org/commentaries/bitcoi ... ed-the-gap

I have provided it as I think that what the "International Energy Agency" has to say worth reading.
I found the section called "Bitcoin and climate change" particularly of interest.

I invite all who are interested in that aspect, or any other, to follow the link.


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