Ban crypto, save the world?

[mozartct]

There's been many excellent discussions on this forum about chip shortages affecting many industries (automotive in particular). It's a story with many chapters so no need to re-hash here.

I am wondering if the growth of crypto mining is an important factor to the overall tightness of the IC supply chain. For one, the # of CPU cycles needed to "mine" a coin gets larger over time. Second, each mining CPU (See Antminer for example) contains a power supply, fan and many others anonymous chips. Of course there's the specialized GPU or some other custom silicon...

These so-called farms are very large.

Could banning crypto rectify market imbalances in the chip business? If not banning, then taxing? Seems to me that there is a large societal externality if VW shuts down because of a crypto mining facility going up in Kazakhstan (made that up for illustration purposes).

 

[Daniel Nenni]

There's been many excellent discussions on this forum about chip shortages affecting many industries (automotive in particular). It's a story with many chapters so no need to re-hash here.

I am wondering if the growth of crypto mining is an important factor to the overall tightness of the IC supply chain. For one, the # of CPU cycles needed to "mine" a coin gets larger over time. Second, each mining CPU (See Antminer for example) contains a power supply, fan and many others anonymous chips. Of course there's the specialized GPU or some other custom silicon...

These so-called farms are very large.

Could banning crypto rectify market imbalances in the chip business? If not banning, then taxing? Seems to me that there is a large societal externality if VW shuts down because of a crypto mining facility going up in Kazakhstan (made that up for illustration purposes).

Most definitely. Not great for the environment either:

EU should weigh a ban on so-called “proof of work” mining in favor of the more energy-efficient “proof of stake.”
The mining of cryptocurrencies including bitcoin serves two functions — introducing new digital coins into circulation and safeguarding transactions that ensure their validity.

Crypto miners use sophisticated computers to solve complex mathematical problems. The miners who are the first to solve the problems are awarded the next block of bitcoins. But the mining process known as “proof of work” — whereby miners compete against each other to crack the code of an algorithm using high-powered computers — is more energy-intensive than its alternative, “proof of stake."

https://nypost.com/2022/01/19/eu-regulator-wants-ban-on-energy-intensive-bitcoin-mining/

 

[Christianheinze]

On the environmental part i'm not very sure if Bitcoin-Mining is a true factor as proclaimed mostly by long-established institutions

Bitcoin Mining Council survey estimates a 56% sustainable power mix in Q2

The Bitcoin Mining Council's initial estimate is promising, but falls short of meeting the aim of transparent and verifiable data on renewable energy usage.

cointelegraph.com

 

[hist78]

There's been many excellent discussions on this forum about chip shortages affecting many industries (automotive in particular). It's a story with many chapters so no need to re-hash here.

I am wondering if the growth of crypto mining is an important factor to the overall tightness of the IC supply chain. For one, the # of CPU cycles needed to "mine" a coin gets larger over time. Second, each mining CPU (See Antminer for example) contains a power supply, fan and many others anonymous chips. Of course there's the specialized GPU or some other custom silicon...

These so-called farms are very large.

Could banning crypto rectify market imbalances in the chip business? If not banning, then taxing? Seems to me that there is a large societal externality if VW shuts down because of a crypto mining facility going up in Kazakhstan (made that up for illustration purposes).

Some thoughts about banning:

1. Will banning the cryptocurrency actually create black markets and make mining even more lucrative?

2. A gamer may finally be able to buy high-end graphic adapters for his/her favorite games after the banning of mining. But how do we justify playing computer games are more critical than mining?

3. Most large scale industrial mining are using ASICS approach with leading edge node implementation. Kick them out will not help automobile industry. Chips in shortage for automobile industry are in old and often very old process nodes.

 

[jms_embedded]

I'm torn on this issue. It's not sustainable, and it's wasteful of energy, but:

- it does add a huge incentive for the innovation of efficient computation of cryptographic primitives

- there is an interesting thesis (not sure I fully agree though) that Bitcoin computations "naturally seek out stranded and curtailed energy sources rather than competing with most other
electricity consumers" (https://seekingalpha.com/article/4452010-bitcoin-energy-usage-isnt-a-problem-heres-why)

People often imagine bitcoin miners competing with other industries for electricity, as though bitcoin mining must push out some other use of electricity. However, because bitcoin miners inherently require extremely cheap electricity sources, they canʼt normally compete with normal users of electricity. As a result, bitcoin miners seek out inefficiencies around the world where electricity is being underutilized and wasted.

The vast majority of energy consumers canʼt go to where the energy is; the energy has to be brought to them. Humans organize themselves based on geography, mainly around shipping channels. We live in coastal or riverside cities, and in the suburbs of those areas, and around rural areas of fertile land. Not around energy.

We donʼt move to where the oil and gas and uranium deposits are; we send folks out to go get the oil and gas and uranium and bring it back to us for consumption in our homes and at gas stations and nearby nuclear stations.

Bitcoin miners are unusual energy consumers in the sense that they can go to wherever the energy source is, as long as they can get some sort of basic internet connection, including a cellular or satellite connection if needed. That means they use energy in quite efficient and unusual ways.

I have a rooftop PV system that generates a surplus in spring that is cashed out in late April at the wholesale rate (2c-4c/kWh) and at one point I was considering buying a crypto mining rig to turn on in the wintertime and early spring... until I did some serious research and realized that it is somewhat capital-intensive --- by homeowner standards --- and needs to be upgraded to the latest computational efficiencies to be cost-effective, so like the fab equipment industry, you want to use it at 100% utilization. Not good in Arizona summers.

 

[mozartct]

Many old chips go into a coin miner. They need to come from somewhere and could be used elsewhere (or the fabs could make other chips). I am not sure if the volume is significant though.

It seems to me that the tradeoff between feeding the crypto bubble and the real world is not a good one. Move data around for no reason (and create no value for the average human) or make cars and other machines that have real benefits for all of us.

When i see new tools being quoted at 30 months, AMAT not hitting their numbers because of chip shortages, our own lead times pushing 40 weeks (was 1-2 weeks before), I mean something has to give. Crypto may be a big contributor to our woes.

 

[jms_embedded]

Move data around for no reason (and create no value for the average human)

I agree with your points.

At the same time, what you've said applies to much of Facebook/Twitter/Youtube/Snapchat/Instagram/etc. as well as advertising that people don't want to see... how do we put value/costs on these things as well and the resources needed to provide them?

 

[mozartct]

@jms_embedded Very fair point. Data is data so how could we discriminate? What bothers me about crypto is the large (and growing) CPU usage. Google does not run a complicated calculation each time it serves an ad.

 

[Staf_Verhaegen]

Google does not run a complicated calculation each time it serves an ad.

They do that when they are profiling you to know which ad to serve you in the future.

 

[AbheekG]

I think banning PoW mining is critical and overdue. While you could argue that hundred something Terawatt-hours is not "that much" when taking into account the global power generation & consumption, it still is a lot and is far from an insignificant amount.

Another point brought up here is about gamers & GPUs: sure banning mining will allow more gamers to buy higher end GPUs, but how is it justified to spend energy on gaming? Well the simple answer to that is a gamer will buy one GPU, and probably keep it a long time while there seems to be no upper limit to how many GPUs crypto miners "need" and are willing to buy.

Also, bringing up gaming and other uses such as social media or data centers isn't really a sensible comparison: those actually provide value, whether it's creating and engaging communities, connecting people or supporting enterprise applications including critical medical, financial & government systems, respectively, among many other positive uses.

On the other hand, mining seems content to burn all those terawatts to generate something that's strayed far from it's origin & values and is almost of no utility: the central premise of cryptocurrencies and the reason for the birth of Bitcoin was the alleged large-scale corruption and depth-happy nature of most governments and financial systems, which allegedly seem content to print money to bail each other out all while "taking power and control away from the masses". Crypto was supposed to change all that by "distributing power back to the masses" supposedly by allowing the common man to bypass centrally issued coins. By devaluing bloated and depth-ridden central currencies, all corruption would magically disappear and the common man and the public at large would be just Kings at last, or so went the dream of early crypto founders.

So how did it go?

Well, terribly! Cryptocurrencies have exceedingly failed at replacing the so-called corrupt centralized institutions as they've themselves become the instruments of manipulation: whales control most popular coins and sway sentiments easily whenever and in whichever direction it suits them. The resulting volatility is extreme, unrelenting and 24x7x365 with valuations fluctuating dramatically even over the course of a few hours sleep. Worse, they offer the common man none of the safeguards and fallbacks offered by central authorities and banking institutions. Simply put, they've come to overwhelmingly embody the worse of the system they sought to replace.

So yes, I say let's at least prevent the wastage of the hundreds of terawatts of power that goes into mining them and enforce a worldwide ban on PoW mining, and any future energy-intensive consensus algorithms. They can continue to exist with consensus mechanisms that aren't energy intensive and thus don't make their proposition worse than it already is.

Also worth reading is this series of rant tweets from Jackson Palmer, the creator of Dogecoin:

https://twitter.com/x/status/1415353984617914370