This area of Northern New York is very economically depressed, and it's interesting to see some of the businesses that set up shop there, or set up their supply chains to draw from that region. They often promise lots of jobs, but few deliver.
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:
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.
I grew up in that neck of the woods. Drove through aroumd 2012. It very much is economically depressed but not THAT depressed. It feels just, cozy and small townish.
>Mr. Recny asked why an enterprise that required only a few people to run it should be able to drive up the operating costs of a company that employed about 500.
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.
The real irony here is that the Bitcoin/Ethereum miners are setting up hardware which runs software designed to maximize inefficiency for the sake of maintaining a system designed for money laundering and tax evasion.
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.
if your viewpoint is doing a "good job"then what would you prefer?
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
There are a lot of things no one ever does a good job of, but that doesn't make them not useful, nor does it mean that they wouldn't by more useful if they did a better-but-still-not-good job of it. Bitcoin is at least doing a less-awful job than any previous attempt managed.
There’s a real need for a currency that’s actually backed by something real, given the amount of silly money sloshing around the system these days
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.
Economic transactions create a tax debt which creates demand for currency to pay the government. Sell stock, car, or some Twinkies, even in a different currency, and they get a cut.
Indirectly, messing with your currency risks economic harm creating a huge incentive for governments not to do that while things are going well.
> Economic transactions create a tax debt which creates demand for currency to pay the government. Sell stock, car, or some Twinkies, even in a different currency, and they get a cut.
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.
The need to pay US taxes in USD is not a software problem it’s a risk mitigation problem. If you accept pesos/whatever for your car and the peso crashed you might owe more in taxes than you where paid and even if you do the transaction today you still need to buy some USD with pesos to put aside for taxes.
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.
> The need to pay US taxes in USD is not a software problem it’s a risk mitigation problem. If you accept pesos/whatever for your car and the peso crashed you might owe more in taxes than you where paid and even if you do the transaction today you still need to buy some USD with pesos to put aside for taxes.
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.
Absolute numbers create bounds. USD can’t drop to 1/100th of it’s current value without huge shifts as people would need to pay 100x as many USD in taxes driving up demand for USD. Now, their is slack in the system, but that’s a good thing as it provides price signals and feedback loops.
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.
What alternative are you suggesting? It seems like no one's actually transacting in Cryptocoins, as evident with an ideal usecase failing; Bitcoin proved a failure among technically competent users attempting to buy digital goods though Steam [1]. Stripe also determined Bitcoin to be an unreliable method for payments [2].
USD ends up getting used because it's
convenient
Exactly.
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.
> What alternative are you suggesting? It seems like no one's actually transacting in Cryptocoins, as evident with an ideal usecase failing; Bitcoin proved a failure among technically competent users attempting to buy digital goods though Steam [1]. Stripe also determined Bitcoin to be an unreliable method for payments [2].
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.
That means the price of a cryptocurrency should be tightly correlated to the hashes per second. I believe that is not the case, but I've only looked at bitcoin.
So, sarcasm aside, it sounds like you support people using their skills and resources to seek profits mining cryptocurrencies. Do you also support real estate investors using their skills and resources to seek profit in rental properties?
You could give your money to charity rather than spend it on making yourself happy. That doesn’t mean you’re evil or promoting inefficiency in any meaningful sense.
It is certainly true that the social utility of a company is not necessarily proportional to the number of employees, but it's not necessarily proportional to the profits either. A glass repair company that goes around breaking windows could make money without creating net utility. That is what many people see bitcoin as. Now, you can debate and argue about specifics vis-a-vis cryptocurrency, but there's a larger issue that bothers me. Why assume that making money means you are benefiting society, in general? I don't care for the assumption that profit is always evil, but the opposite assumption doesn't make sense either. Individual self-interest works marvelously to advance collective goals, like the cells in our body work together, but cancer and viruses also exist, and the reasons why they multiply and are harmful to a collective are very subtle.
> Why assume that making money means you are benefiting society, in general?
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.
Sure, that is a familiar explanation of the utility of trade from Econ 101. But it does involve simplifying assumptions.
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.
> What you're leaving out, is that "voluntary" transactions have effects on third parties who do not consent
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.
Utility is an non-measurable unit with no connection to anything real that economics textbooks use to help people conceptualize basic theory. Capital creation versus rent seeking are concepts grounded in reality with real consequences. Creating money does not necessitate capital creation or increased well being. I suggest reading about the broken window fallacy to understand why you are wrong.
I'm definitely not wrong. The description I gave is completely accurate. It, however, may not be complete. The broken window parable does not actually in any way negate what I said - the purchase of the window still makes both parties better off.
I don't understand how you can compare violation of property rights (breaking windows) to a completely voluntary system such as Bitcoin, the private production and use of which violates no property rights.
I don't think that the harm of breaking windows is solely due to violation of private property rights. Maybe the windows are on a publicly owned building. Or, even if they are private property, there is harm done to the public as a consequence of the damage. People will take steps to avoid such damage. And conversely, maybe the mining of Bitcoin harms public interests too. I think it's easy to just assume away the issues that go beyond private interests if you identify morality with sacrosanct property rights.
Please provide a definition of harm that excludes the violation of property rights. We need not consider the difference between private property rights and property rights because these things are one and the same.
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.
Bitcoin on the macro consumes a lot of electricity which produces carbon.
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.
Its doesn't have any mining at all. You put your coins in a smart contract that allows you to get randomly selected to create blocks from time to time, if you do something wrong then some of your coins are taken from you, if you do everything right you get a portion of the fees and/or a bit of inflation. There are lots of slightly different variants of it though
It doesnt have the same history of security that proof of work has so its just newer and hard to get the incentives correct to create a secure network. Ethereum is working on moving to it and some others as well.
Bitcoin is _not_ trying to go proof of stake because proof of work is the most secure consensus algorithm that exists. Proof of stake has some lingering unsolved problems, search for "nothing at stake problem" and "long range attack."
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).
The energy cost does not correlate with the usage of the network. A block with 1 transaction in it needs the same amount of energy as a block with 3000 transactions in it.
The peak energy cost is limited by the price of bitcoin though.
So by your metric the global banking industry, which uses several orders of magnitude more electricity than the bitcoin network, also isn't sustainable.
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.
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.
Proof of work cannot be made to consume less power. Every single increase in hash rate efficiency just results in the same kWh being used to make more hashes followed by an increase in block difficulty. This is literally a security feature of the network, since it’s designed to prevent 51% attacks.
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.
If you walked into Starbucks every day and took most of the sugar packets so that they're aren't enough for all the other customers, proclaiming "they should've charged $0.10 each!" when caught would probably not earn you much sympathy from the regular customers.
That would be a good analogy if there were government price controls on sugar packets at Starbucks. Or if electricity was free. As it stands, it's a pretty poor analogy.
I fully understand this reaction. Crypo is delivering on none of it's promises and leaving an ugly mark on the production side. Transactions are way too slow for retail, decentralization is a joke because the largest mining pools are manipulating the supply with less transparency than national currencies, the value is too volatile to entice people to use it for anything other than speculation, and it is literally the most environmentally destructive modern technology at the moment. If miners moved into my town you bet my ass I would be at town hall telling them to fuck off.
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[ 0.19 ms ] story [ 1601 ms ] threadChobani 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
Given the trend the last few months, I’m not sure “soaring” is the adjective I’d choose...
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.
Govt can be terribly naive.
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.
You could argue that having currency transactions based on distributed trust is useful to humanity.
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
> You could, but no one ever seems to do a good job of [making such an argument].
Stalin was also quite sure he knew what was useful for humanity.
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.
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...
[2] https://stripe.com/blog/ending-bitcoin-support
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.
That's reaching. Just because some people use it for that doesn't mean that's what it's designed for.
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.
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.
It's hard to support when it's so wasteful of a critical resource.
Are they trying to go proof of stake?
https://hackernoon.com/what-is-proof-of-stake-8e0433018256
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/)
The peak energy cost is limited by the price of bitcoin though.
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.
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.
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.