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The crypto currency disaster has done far more damage than most realize. The resources it has taken in time, talent, communications and misallocation of resources of all types is grossly underestimated. The distortions in capital, labor, and resources of all types is nothing short of massive and created far more problems and distortions that will haunt us for a long time to come. These resources can't be recovered any time soon and the only beneficiaries will be law firms and politicians that will spend valuable time and resources to clean up this worldwide mess. When the difference between success and failure in an economy or business can be less that a five or six percent deviation, crypto has done as much damage as a war and the mess is still unknown in scope and size.
Utilizing tech strategically is as important as the tech itself and crypto I hope the major, costly lesson that crypto is just starting to be realized by many will be learned and not ignored. Visa could do everything crypto could worldwide, seamlessly and at low cost. Traveling in Europe, Mexica and Canada, Visa among others provided a seamless, low cost, secure alternative to cash.
The application of tech is as important as the tech itself and the crypto mess is but one of many examples of the misuse of resources and the damage and distortions it can cause. We must become more strategic and thoughtful of our applications of tech if we want to realize their full potential and value.
Dan, what do you think will happen to the crypto mining facilities? Will they become data centers or are they to specialized? Any thoughts on this would be appreciated?
Dan, what do you think will happen to the crypto mining facilities? Will they become data centers or are they to specialized? Any thoughts on this would be appreciated?
Dan, what do you think will happen to the crypto mining facilities? Will they become data centers or are they to specialized? Any thoughts on this would be appreciated?
I separate crypto from blockchain. Crypto is just modern goldbugs and tulips, the idea of a trustless currency is vapid since society and trust is the whole point of currency. I give you a dollar today, you trust it to be useful a year from now in dealing with anyone you like. Building good money is all about building trust, and it took decades to build the US $. Imperfect, but far better than anything prior. Certainly far better than gold, which screwed up in ways that BitCoin repeated due to following fantasy rather than studying history.
Blockchain is very interesting technology. Unfortunately, it financed itself with the "coin" fantasy rather than selling for its own benefits. When funding is not aligned with function you get distortion as well as a failure to improve the function. As a result, the functionality you can derive from the $10,000 or so needed to mint a new block (which is rewarded with around 6 coins, still a great deal) is not even close to balanced by the fees for using the chain, and the work that needs to be done to multiply the effectiveness of each block (by rolling up microtransactions) has only weakly been implemented.
The practical consequence is that whatever good the blockchain might be capable of, it still requires bitbarns burning megawatts on specialized ASICs to keep up with the 240 new blocks per day goal. There is no way to turn down the heat and there is no transaction revenue even close to replacing coins to pay for it to keep going. If BTC collapses to under $2k it is lights out.
Stake-based schemes like Ethereum (now) are a 1,000x less power intensive but in theory prone to manipulation by dominant stakes, and large stakes are already in existence, enough to make one wonder if they will remain safe. After all, there is by design no trust other than numbers, but the numbers say you will need luck or trust.
There is no way to turn down the heat and there is no transaction revenue even close to replacing coins to pay for it to keep going. If BTC collapses to under $2k it is lights out.
The crypto currency disaster has done far more damage than most realize. The resources it has taken in time, talent, communications and misallocation of resources of all types is grossly underestimated. The distortions in capital, labor, and resources of all types is nothing short of massive and created far more problems and distortions that will haunt us for a long time to come. These resources can't be recovered any time soon and the only beneficiaries will be law firms and politicians that will spend valuable time and resources to clean up this worldwide mess. When the difference between success and failure in an economy or business can be less that a five or six percent deviation, crypto has done as much damage as a war and the mess is still unknown in scope and size.
You are spot on. There has been an enormous misallocation of resources and capital to produce nothing useful. Capital misallocations were instrumental in the 2000/01 and 2008/09 market crashes.
As of August 2020 the estimates of total worldwide electricity used for crypto-mining range from 120 and 240 billion kilowatt-hours per year. That is greater usage than ALL conventional data centers in the world and represents between 0.4% and 0.9% of total worldwide electricity usage. I'm surprised there isn't broad outrage regarding the massive CO2 emissions from crypto mining.
Absolutely. I've written in the past that crypto is a tulip bulb without the potential of a flower. However, one difference stands out - crypto is a very easy and convenient laundry mat for criminals. Once governments worldwide figure out how to track crypto exchanges, criminals will be forced to find a new way to launder money. I think there is a reasonable chance that governments may know far more about crypto exchanges than they let on today. It is common for law enforcement to extend the availability of rope when their targets are tying a noose.
The economic frictions of legal, accounting and regulatory compliance have all increased considerably during the last couple of decades. In some sectors, these increased fixed costs have already led to consolidation and a lack of new companies entering the sectors.
Current hash rate is 220 EH/s. Average mining rate is 600 sec in principle, and currently about right, so that is 132 x 10^21 hashes per block. Best mining rigs run around 25 pJ per hash so about 3,300 x 10^9 J or lets round that up to 1GWh per block. Not all rigs are the best, anyway. At 5 cents/kWh that comes to $50,000 per block. Yeah, I was way off. The miner gets 6.25 BTC per block plus some revenue from blockchain fees so it is about $8,000 of electricity per block in principle.
If the average mining rig is 2.5x less efficient than the best, then that would support your $19,000 number. That also implies a lot are even worse so at the moment half the mining rigs should be losing money, not even considering their depreciation, and that should really start to eat into fleet size if the GTC price stays where it is. I don't think the BTC protocol has a way to make the mining easier or increase the coin reward per block, everything is biased assuming continuous improvement in rate and cost for mining. But the mining rate seems to have held up, which may indicate a lot of mining is running at even lower electricity rates and most miners are staying in the game.
