In parts of the world where the cost of electricity is low but reliable internet connectivity is available, cryptocurrency mining is widespread among those who can procure the hardware. For these operators, it's a low-risk way to generate profit and obtain foreign currency, and typically presents a far better opportunity than most other legal or illegal employment that can be had in the area.
This profiteering situation tends to crop up in places where the cost of electricity is "artificially" low, e.g. the government subsidizes it because of national security, humanitarian reasons, or to promote economic development, or places that cannot meaningfully participate in international bulk electricity export (e.g. distance, politics). These places formed functional market islands until recently, so their pricing was not relevant in the global context.
With cryptocurrency mining, the miners are engaging in a global arbitrage on energy prices. While the environmental costs are already externalized by the producer of the electricity, the electricity producers made those decisions before they foresaw that individual citizen operators could consume large amounts of electricity, and scale their consumption higher with fewer constraints than industrial consumers can.
Solutions are possible, but challenging to implement and enforce. If you switch to progressive pricing, you need better meters, and determined miners will steal or convince people to resell. If you want to regulate mining, you will need enforcement and tackle corruption. If you want to "let the market fix it", poor people won't be able to afford electricity.
Within Kosovo, the Serbian community controls the hydroelectric plant, and the Kosovan community controls the two lignite plants. This adds an extra complication for policymakers.
> so their pricing was not relevant in the global context
There are other sinks for cheap electricity in an industrial economy. Aluminum is a common one, as the main extraction is an electrochemical process. Canada is the 4th largest producer and Iceland (!) 11th.
Competitive and relevant Aluminum smelting requires massive economies of scale, an initial capital outlay, and a supply chain. A competitive smelter might require a billion dollars and a few years to build. And you have to negotiate a regular stream of bauxite ore, materials, etc. It's not an easy or quick arbitrage.
A price is a signal and serves as incentive to produce the good. Setting an arbitrary low price for anything is a bad idea.
> If you want to "let the market fix it", poor people won't be able to afford electricity.
If you want to give poor people electricity, just give them money which they can use for electricity or whatever else they may need. The solution isn't to pretend that electricity is cheaper than it is. Not only does it create issues like miners exploiting the system, but it also encourages wasteful uses of electricity, removes a valuable market signal and removes autonomy of those poor people you're trying to help. Maybe they would trade off some electricity for better housing. Instead you're making the decision for them.
Thanks for saying that. "Give them money" may not be the most optimum solution, but it's nearly always the most practical. Not only is it least likely to lead to unwanted side effects, it's actually most likely to generate positives ones.
If you're allowed to decide how to spend your money, you're likely to do a lot of low-hanging-fruit stuff that you wouldn't otherwise, like fix that windy window frame. No governmental program can even come close to this efficiency - they'd just do a "thermal reabitation" on the whole building, which will be 50% better and 900000% more expensive.
The reason giving money works so well is that it is both very flexible, and uses a huge information advantage - each person knows their situation better than the government. It's not about gov being inefficient (tho they may be) it's that it's incapable in principle of approaching the efficiency of "give them money".
What would happen in reality is poor people would steal electricity and the whole system would collapse, which is what has happened in many places many time before and is still happening in many places. It's not like it's hard to draw a few cables.
Also "just give money to people" in systems with very poor and sometimes corrupted administrations is a very sure way of ensuring poor people get nearly nothing and it all gets siphoned in the pockets of not very nice people.
This is all true if the country thinks allowing folks to take advantage of this "arbitrage" would be useful (for some definition of "useful"). And on other hand I can very well see how government(s) can take the other approach and just do some heavy-handed policing.
It's basically distributed neoliberalism: you don't have to wait for a United Fruit Company to turn up and wreck your country's economy for profit, anyone can do it now!
Bitcoin is like if someone made a real version of "Universal Paperclips"[1]. We now have a segment of the economy optimizing for creating cryptocurrency tokens with little-to-no use value but huge trade value. We already see the impacts on electricity capacity and some luxury goods (video cards). As these operations become more and more sophisticated, it's not inconceivable that they will eventually put price pressure on raw materials as well.
Maybe so, but at least mining is actually necessary to get gold out of the ground. Whereas running a distributed database and gambling can both be had for much less.
Yes, but gold hasn't been explicitly designed to require ever increasing amounts of energy to extract ever diminishing quantities, and gold does have some practical use (approx 8% of annual production is used in mobile phones, televisions etc.)
Proof of waste cryto currencies are a malignancy on society. The people involved (even indirectly) are going to find themselves viewed and treated very similarly to other malign forces as time goes on regardless of how justified and practical they think they're being right now. In my mind they're right besides smallpox blanket givers. It's just business!
Those who live under corrupt regimes and/or hyperinflation have a different view. Furthermore, one could say the frames you're rendering for Netflix or Call of Duty is proof of waste.
How much crypto is traded to avoid corrupt regimes and hyperinflation? 1%? 0.1%? There's probably a few zeroes in there.
Regarding Netflix, it's better for the environment than buying a blu-ray and blu-ray player or driving to the cinema. Can the same be said about crypto?
While I agree with the sentiment - as obviously crypto can sometimes be useful in that context - you're also talking about a tiny fraction of the human population where it's relevant in that way. It's a small fraction even within nations in those conditions.
How has Bitcoin saved Venezuela? Well it helped a small number of people in the country, sure. It obviously didn't fundamentally make any difference, and it's not going to anywhere else either. For the average person Bitcoin is not easier to acquire, use or manage than USD in locations such as Lebanon, Turkey or Venezuela.
> furthermore, one could say the frames you're rendering for Netflix or Call of Duty is proof of waste
It certainly is in terms of being only for entertainment and no deeper use. However the amount of energy wasted here (let’s say 300W on a fairly high end machine) falls into the average area of energy spending per person, and thinks like driving or keeping unnecessary light bulbs on is same or worse. Crypto things however seem a whole other level of energy waste.
crypto evangelicals are either get rich quick folks or sound money advocates. The former sucks but they are in every investment cicle.
The latter's religion has been based in seeing governments bailout bad actors with 0 consequences & devalue a currency astronomically over a 100 year period. Salaries are not keeping with the rise in asset prices which means the rich get richer and the poor get poorer. Buying a house in CA as a millennial is laughable.
Bitcoin or a gold standard is the only system that encourages a thriving middle class economy and keeps the government from poor policy decisions. Bitcoin seems to be better than gold since its mobile, transparent, finite. But i'd welcome a return to a gold standard with open arms.
I believe that 1) not all solutions can be 100% perfect for all problems an 2) a medium of exchange created by the people is our only hope to keep the gov/fed from enslaving with us debt forever 3) Judging what should/should not be able to use electricity is a slippery slope.
Why people mention Ethereum as a 'greener Bitcoin' baffles me. There are already some networks that are a thousand times greener than what Ethereum might be when it switches, and that is if the switch goes as planned and on schedule. There are a couple of networks that are already carbon neutral or even negative. If Ethereum takes over Bitcoin, it will still be a wasteful network, and still seen as (rightly so) a villain.
Ethereum has been "about to switch away from PoW" for years and years. They get zero points for this up until the day it actually happens. For now, they are massively harmful, and judging by their history, will continue to be so.
The smallpox blanket givers are maligned now but they and their people (~europeans) did grab and are still holding 97% of the territory they set out to conquer. History is written by the victors, and it's questionable whether this outcome is actually beneficial for mankind / the planet. On the surface it is - look at all the tech! On the other hand the tech actually results in an ever growing rate of destruction (of native nature and culture, aka. whatever was there before), and that trend was visible from day one.
In other words, bitcoin & co. aren't the first toxic, destructive get-rich-quick schemes, and we as a society have shown time and again we're unable to really resist most of them.
Because this common caricature of "smallpox blanket" is not based in verifiable historical fact. There's no clear evidence that Europeans were literally weaponizing smallpox to wipe out most of native American populations. The understanding of how infection spread happened a good 200 years later, than depopulation.
Allegedly, there are tons of money from the North Kosovo/South Serbia generated from crypto flowing into the investments in Belgrade. For example, here's the article of the policeman that was acquitted for not responding to the calls in the nights when the government organised tearing down barracks by using the illegal forces. This policeman then had his second appartment building (not House) washed and entered in the system.
This is doing a terrible damage to the society. It's tearing it apart to two layers, one extremely rich and openly criminal, and the other poor one. It's like if I'm watching Narcos. Crypto is not an issue, the corrupted government is. It would be the same if they got their money from drugs or weapons.
Just as an interesting fact, the electricity price is 7 cents per kwh during the day and 3 cents during the night, these prices make GPU mining very profitable. In the North where the govt. is weak the electricity is simply not paid, this has allowed a ton of small and big mining operations to pop up, the big ones are backed by the local gangs.
Kazakhstan government is facing incredible amount of protest now due to rising fuel prices. Makes me wonder how much of that is due to their cryptofarms putting upward pressure on energy prices across the board… Some people got the memo it seems
It has not had any link to power consumption, due to crypto mining.
Electricity generation doesn't impact gasoline prices, as much as you'd think. If you wish to see evidence - then go check out the prices of natural gas(widely used for power generation) and crude oil... and how they drastically vary in different markets.
And finally - Kazakhzstan is 70% coal power, while the world is only 3.5% on oil and 23% of gas. And there's a lot of spare coal power capacity...
I have no crypto holdings and feel good everytime it goes down because it validates my decision.
That said does anyone have any real data on this or is this one of those internet talking points that just sounds good? Like what percentage of power in these countries is being used by crypto farmers. If its 25% then yeah that seems like an out of control problem. If its 0.25% then it seems like a pointless scapegoat and we would need to start looking at how much of the countries power goes into manufacturing candy or maintaining golf courses or a long list of other things that only a portion of the country consumes.
Ah, maybe, it depends on the country. In Greece you'd get a fine if caught, but that's a huge if. You probably wouldn't be able to bribe your way out of it unless you were a huge company, as corruption is somewhat localized to higher levels.
> Coin mining has been on the rise in northern Kosovo, mostly populated by Serbs who do not recognise the state of Kosovo and refuse to pay electricity.
Think about that for a moment... There are a large number of people who just refuse to pay for electricity, and yet it is still delivered to them...
North Kosovo is a very tricky political situation where the govt. does not have effective control of the region, for political reasons you can’t force the population to pay but you can’t also cut them off either, since Serbia will step in and undermine Kosovo’s sovereignty.
The electric situation has allowed domestic and foreign opportunists to set up extensive mining operations with free electricity, this has cost the Kosovo govt. tens of millions in bills they have to cover. My grandpa’s village is a popular spot, every house is renting out their garages at crazy high prices, I’ve seen videos of rigs worth hundreds of thousands sitting in the barn in shelves next to the cows who use the heat.
> My grandpa’s village is a popular spot, every house is renting out their garages at crazy high prices, I’ve seen videos of rigs worth hundreds of thousands sitting in the barn in shelves next to the cows who use the heat.
> "I read somewhere that each cow generates 2,350 BTUs. We have 255 of them in here keeping this barn warm," Sweet said. "It's hard to believe a barn this size there's no heat in this beside the cows." Sure enough, some sources say cows give off 4,500 BTUs per hour. The barn does have insulation in the ceiling and end walls, and the side curtains have an R-value of 2. They leave the equipment they use daily in the barn so it doesn't freeze up.
> "One cow gives off 4,400 btu's per hour. Our Dairy-Aire system recovers 2,500 btu's. A 60-cow herd will easily heat and cool the average 1,500 to 2,000 sq. ft. home," Lussenden told FARM SHOW, noting that the system can also be installed in high capacity hog, poultry and other confinement buildings.
> It wasn’t long before the inventive engineer realized that, since a single cow gives off 3,500-4,000 BTU an hour, a mere 15 milkers could provide sufficient excess warmth to heat a standard 2,000-square-foot home.
You cannot simply stop providing electricity to people that don't pay the bill. It's a long process that takes time and sometimes providers don't even bother, because of the human rights. That's how it is in my European country and I suppose it is similar there too.
Like my bill is 900kW/mo for a family of 3 with climatisation in the southern US. I think this is a reasonable amount. Then, you can still mine crypto but know you can't go balls to the wall.
> Coin mining has been on the rise in northern Kosovo, mostly populated by Serbs who do not recognise the state of Kosovo and refuse to pay electricity.
"Mimoza Kusari-Lila, an MP from the ruling Vetevendosje party said that “it is a matter of weeks” until consumers in northern start paying their own bills for the first time since the war ended in Kosovo in June 1999."
"Serb consumers in the four northern municipalities have not paid for their electricity since 1999. According to Radio Free Europe, the total cost of the energy used in the Serb-majority municipalities is around 12 million euros per year."
Whoever really believes that people who haven't paid their bills since 1999 would magically start paying in 2022 is quite naive.
Even 30 years ago, while Kosovo was part of Serbia, people didn't pay for electricity. But at that time Albanians weren't paying for it.
Later tables turned and Albanians become rulers, but then Serbs refused to pay.
And why electricity was still delivered to the people in both cases - well, with everithing that was/is going on there that's the most benign issue one can think off.
Readit News
This profiteering situation tends to crop up in places where the cost of electricity is "artificially" low, e.g. the government subsidizes it because of national security, humanitarian reasons, or to promote economic development, or places that cannot meaningfully participate in international bulk electricity export (e.g. distance, politics). These places formed functional market islands until recently, so their pricing was not relevant in the global context.
With cryptocurrency mining, the miners are engaging in a global arbitrage on energy prices. While the environmental costs are already externalized by the producer of the electricity, the electricity producers made those decisions before they foresaw that individual citizen operators could consume large amounts of electricity, and scale their consumption higher with fewer constraints than industrial consumers can.
Solutions are possible, but challenging to implement and enforce. If you switch to progressive pricing, you need better meters, and determined miners will steal or convince people to resell. If you want to regulate mining, you will need enforcement and tackle corruption. If you want to "let the market fix it", poor people won't be able to afford electricity.
Within Kosovo, the Serbian community controls the hydroelectric plant, and the Kosovan community controls the two lignite plants. This adds an extra complication for policymakers.
There are other sinks for cheap electricity in an industrial economy. Aluminum is a common one, as the main extraction is an electrochemical process. Canada is the 4th largest producer and Iceland (!) 11th.
> If you want to "let the market fix it", poor people won't be able to afford electricity.
If you want to give poor people electricity, just give them money which they can use for electricity or whatever else they may need. The solution isn't to pretend that electricity is cheaper than it is. Not only does it create issues like miners exploiting the system, but it also encourages wasteful uses of electricity, removes a valuable market signal and removes autonomy of those poor people you're trying to help. Maybe they would trade off some electricity for better housing. Instead you're making the decision for them.
If you're allowed to decide how to spend your money, you're likely to do a lot of low-hanging-fruit stuff that you wouldn't otherwise, like fix that windy window frame. No governmental program can even come close to this efficiency - they'd just do a "thermal reabitation" on the whole building, which will be 50% better and 900000% more expensive.
The reason giving money works so well is that it is both very flexible, and uses a huge information advantage - each person knows their situation better than the government. It's not about gov being inefficient (tho they may be) it's that it's incapable in principle of approaching the efficiency of "give them money".
Also "just give money to people" in systems with very poor and sometimes corrupted administrations is a very sure way of ensuring poor people get nearly nothing and it all gets siphoned in the pockets of not very nice people.
What do you think of replacing the subsidy with giving citizens/industries electricity vouchers of equivalent value?
https://news.ycombinator.com/item?id=29808640
It's practically easier to mandate discounts or payouts to vulnerable households, than it is to artificially reduce price of electricity.
If you're that avid about crypto mining - you may want to just build your own hydro electric power plant.
Absolutely crazy.
[1] https://www.decisionproblem.com/paperclips/index2.html
Deleted Comment
How much crypto is traded to avoid corrupt regimes and hyperinflation? 1%? 0.1%? There's probably a few zeroes in there.
Regarding Netflix, it's better for the environment than buying a blu-ray and blu-ray player or driving to the cinema. Can the same be said about crypto?
How has Bitcoin saved Venezuela? Well it helped a small number of people in the country, sure. It obviously didn't fundamentally make any difference, and it's not going to anywhere else either. For the average person Bitcoin is not easier to acquire, use or manage than USD in locations such as Lebanon, Turkey or Venezuela.
It certainly is in terms of being only for entertainment and no deeper use. However the amount of energy wasted here (let’s say 300W on a fairly high end machine) falls into the average area of energy spending per person, and thinks like driving or keeping unnecessary light bulbs on is same or worse. Crypto things however seem a whole other level of energy waste.
The latter's religion has been based in seeing governments bailout bad actors with 0 consequences & devalue a currency astronomically over a 100 year period. Salaries are not keeping with the rise in asset prices which means the rich get richer and the poor get poorer. Buying a house in CA as a millennial is laughable.
Bitcoin or a gold standard is the only system that encourages a thriving middle class economy and keeps the government from poor policy decisions. Bitcoin seems to be better than gold since its mobile, transparent, finite. But i'd welcome a return to a gold standard with open arms.
I believe that 1) not all solutions can be 100% perfect for all problems an 2) a medium of exchange created by the people is our only hope to keep the gov/fed from enslaving with us debt forever 3) Judging what should/should not be able to use electricity is a slippery slope.
Dead Comment
In the end, Bitcoin's relentlessly conservative approach to crypto will likely be its downfall.
In other words, bitcoin & co. aren't the first toxic, destructive get-rich-quick schemes, and we as a society have shown time and again we're unable to really resist most of them.
Because this common caricature of "smallpox blanket" is not based in verifiable historical fact. There's no clear evidence that Europeans were literally weaponizing smallpox to wipe out most of native American populations. The understanding of how infection spread happened a good 200 years later, than depopulation.
Dead Comment
https://www.krik.rs/n1-policajac-priznao-krivicu-u-slucaju-s...
This is doing a terrible damage to the society. It's tearing it apart to two layers, one extremely rich and openly criminal, and the other poor one. It's like if I'm watching Narcos. Crypto is not an issue, the corrupted government is. It would be the same if they got their money from drugs or weapons.
Deleted Comment
You're speaking like cryptominers are criminals...
Dead Comment
It's so bad that the presidential residence was set on fire a few hours ago.
The presidential residence in Almaty which is a thousand miles from the actual capital where the president and Nursultan are.
Electricity generation doesn't impact gasoline prices, as much as you'd think. If you wish to see evidence - then go check out the prices of natural gas(widely used for power generation) and crude oil... and how they drastically vary in different markets.
And finally - Kazakhzstan is 70% coal power, while the world is only 3.5% on oil and 23% of gas. And there's a lot of spare coal power capacity...
https://ourworldindata.org/electricity-mix#:~:text=In%202019....
Proof of work cryptocurrencies have got to be the worst invention in a decade.
That said does anyone have any real data on this or is this one of those internet talking points that just sounds good? Like what percentage of power in these countries is being used by crypto farmers. If its 25% then yeah that seems like an out of control problem. If its 0.25% then it seems like a pointless scapegoat and we would need to start looking at how much of the countries power goes into manufacturing candy or maintaining golf courses or a long list of other things that only a portion of the country consumes.
Think about that for a moment... There are a large number of people who just refuse to pay for electricity, and yet it is still delivered to them...
That is the real problem.
The electric situation has allowed domestic and foreign opportunists to set up extensive mining operations with free electricity, this has cost the Kosovo govt. tens of millions in bills they have to cover. My grandpa’s village is a popular spot, every house is renting out their garages at crazy high prices, I’ve seen videos of rigs worth hundreds of thousands sitting in the barn in shelves next to the cows who use the heat.
I'd like to question the "cows who use the heat".
Its the other way around. https://www.vpr.org/vpr-news/2018-01-04/in-deep-freeze-how-o...
> "I read somewhere that each cow generates 2,350 BTUs. We have 255 of them in here keeping this barn warm," Sweet said. "It's hard to believe a barn this size there's no heat in this beside the cows." Sure enough, some sources say cows give off 4,500 BTUs per hour. The barn does have insulation in the ceiling and end walls, and the side curtains have an R-value of 2. They leave the equipment they use daily in the barn so it doesn't freeze up.
Another estimate of cow to btu: https://www.farmshow.com/view_articles.php?a_id=908
> "One cow gives off 4,400 btu's per hour. Our Dairy-Aire system recovers 2,500 btu's. A 60-cow herd will easily heat and cool the average 1,500 to 2,000 sq. ft. home," Lussenden told FARM SHOW, noting that the system can also be installed in high capacity hog, poultry and other confinement buildings.
https://www.motherearthnews.com/homesteading-and-livestock/c...
> It wasn’t long before the inventive engineer realized that, since a single cow gives off 3,500-4,000 BTU an hour, a mere 15 milkers could provide sufficient excess warmth to heat a standard 2,000-square-foot home.
---
The cows don't need mining rigs.
https://www.aljazeera.com/economy/2021/11/5/as-israel-threat...
I think we have social programs for people who can't pay for electricity. Or at least I hope so...
Like my bill is 900kW/mo for a family of 3 with climatisation in the southern US. I think this is a reasonable amount. Then, you can still mine crypto but know you can't go balls to the wall.
This is a very loaded, technically inaccurate statement. This recent article explains the situation better: https://balkaninsight.com/2021/11/23/kosovo-to-end-free-ener...
"Serb consumers in the four northern municipalities have not paid for their electricity since 1999. According to Radio Free Europe, the total cost of the energy used in the Serb-majority municipalities is around 12 million euros per year."
Whoever really believes that people who haven't paid their bills since 1999 would magically start paying in 2022 is quite naive.
Even 30 years ago, while Kosovo was part of Serbia, people didn't pay for electricity. But at that time Albanians weren't paying for it.
Later tables turned and Albanians become rulers, but then Serbs refused to pay.
And why electricity was still delivered to the people in both cases - well, with everithing that was/is going on there that's the most benign issue one can think off.