Bitcoin crash coming?

[Wayne 962]

Originally Posted by ShopCat

I'd argue this is good for the long term of BTC. China crackdown hopefully leads to a more decentralized mining network. USA needs to get it together. I think there is a big rig in TX coming.

Your optimism and enthusiasm for Bitcoin is truly admirable (and that is not meant to be sarcastic). I salute that (but still remain a big skeptic on crypto 1.0.0).

-Wayne

[Brando]

Originally Posted by ShopCat

I'd argue this is good for the long term of BTC. China crackdown hopefully leads to a more decentralized mining network. USA needs to get it together. I think there is a big rig in TX coming.

You would be correct with that statement. So now we have CN firms pushing their (our?) money back into places where they can continue to reap the rewards of mining.

Chinese Bitcoin Firm to Invest $25M in Texas Mining Center

BIT Limited, a Chinese crypto mining company, has announced that it has entered into a binding investment term sheet with Dory Creek LLC to invest in a crypto mining data center in Texas. Dory Creek LLC is a wholly-owned subsidiary of Bitdeer, Inc.

The Chinese company will invest $25 million and jointly construct and operate the Texas mining center with Dory Creek LLC. The mining center has a total power capacity of 57.2 megawatts.

Currently, the majority of BIT Mining’s crypto mining operations take place in China’s Sichuan province, a hotspot for crypto miners due to the low cost of hydroelectric power.

The move to open a mining center in Texas is part of BIT Limited’s objective to lower its carbon footprint. According to a prepared statement, the firm claims that more than 98% of its power capacity would be generated from green sources.

Crypto Mining: China and the United States

China and the United States are competing for a foothold in the growing crypto mining business.

According to Cambridge University, almost two-thirds of the world’s Bitcoin mining industry occurs in China. However, this figure is on the decline. In September 2019, China enjoyed 75% of the world’s Bitcoin mining industry.

China still has a significant command of the Bitcoin mining market, but the United States has been pivoting to this industry, too. Today, the United States holds over 7% of the world’s Bitcoin mining industry, up from about 4% in September 2019.

What’s more, BIT Mining is not the first company to turn to Texas’ mining potential. In March of this year, UK-based Argo Blockchain bought land in the Lone Star State to launch a Bitcoin mining operation. U.S. firm Riot Blockchain also dropped $650 million on a massive Bitcoin mining site in Texas last year.

Oh, and I came across this earlier this week regarding crypto in the corporate news cycle:

[Brando]

Also, Bitcointalk and the BTC Mining sub at Reddit can be full of useful info on occasion.

I use the former to track updates for Phoenix Miner/T-Rex Miner and the latter for just seeing what's "news" throughout the day. FYI, the latter does get its share of BS posts.

[Wayne 962]

The move to open a mining center in Texas is part of BIT Limited’s objective to lower its carbon footprint. According to a prepared statement, the firm claims that more than 98% of its power capacity would be generated from green sources.

I call BS on that. The only way that would / could happen was if they were installing new electricity *generation* capability as part of the construction of the site. Otherwise, they are just taking existing electrical supplies off of the grid. As far as I know, there is no "excess" electrical capacity just sitting around in Texas - if you "take" the power from somewhere else, replacement energy will have to be generated using traditional carbon-based methods.

I invite someone to argue the opposite, perhaps there's something I haven't thought of...

-Wayne

[ShopCat]

Originally Posted by Wayne 962

I call BS on that. The only way that would / could happen was if they were installing new electricity *generation* capability as part of the construction of the site. Otherwise, they are just taking existing electrical supplies off of the grid. As far as I know, there is no "excess" electrical capacity just sitting around in Texas - if you "take" the power from somewhere else, replacement energy will have to be generated using traditional carbon-based methods.

I invite someone to argue the opposite, perhaps there's something I haven't thought of...

-Wayne

I think more demand for green energy can only be good for green energy production in the future. If BTC mining (or any industry) pushes green energy demand that is only a good thing long term and probably the most efficient and quickest way to transition to renewables.

[Wayne 962]

Originally Posted by ShopCat

I think more demand for green energy can only be good for green energy production in the future. If BTC mining (or any industry) pushes green energy demand that is only a good thing long term and probably the most efficient and quickest way to transition to renewables.

But why would more BTC mining push green energy? It's a business like any other, and they will want the lowest price, regardless of it being green or not? It's not like these BTC that will be mined will be special "green" ones? I mean, you could get away with that if you were making "green" consumer products - the customer might pay a premium for that. But these are commodity instruments that are no different from ones mined elsewhere?

I just don't understand the argument that says "mining more Bitcoin will encourage more green energy". There's no reason or incentive for that? The hydro power that the miners have been using in China is used because it's cheaper. "Green" energy is not cheaper here in the states (particularly in Texas), last time I checked...

-Wayne

[cstreit]

Originally Posted by Wayne 962

I call BS on that. The only way that would / could happen was if they were installing new electricity *generation* capability as part of the construction of the site. Otherwise, they are just taking existing electrical supplies off of the grid. As far as I know, there is no "excess" electrical capacity just sitting around in Texas - if you "take" the power from somewhere else, replacement energy will have to be generated using traditional carbon-based methods.

I invite someone to argue the opposite, perhaps there's something I haven't thought of...

-Wayne

Wayne they're only buying the electrons generated out of solar. Much of it goes to waste as once they cool down from sitting too long they don't work. Its just extra.

[ShopCat]

Originally Posted by Wayne 962

But why would more BTC mining push green energy? It's a business like any other, and they will want the lowest price, regardless of it being green or not? It's not like these BTC that will be mined will be special "green" ones? I mean, you could get away with that if you were making "green" consumer products - the customer might pay a premium for that. But these are commodity instruments that are no different from ones mined elsewhere?

I just don't understand the argument that says "mining more Bitcoin will encourage more green energy". There's no reason or incentive for that? The hydro power that the miners have been using in China is used because it's cheaper. "Green" energy is not cheaper here in the states (particularly in Texas), last time I checked...

-Wayne

I think the two environmental based arguments are at odds. I see on one had energy consumption will kill Bitcoin, and on the other hand Bitcoin has nothing to do with pushing green energy. If the argument that bitcoin can fail because of its energy consumption and environmental impact is true, then is it not also true that in order for bitcoin to survive, it has to become more environmentally friendly? So miners and the multi trillion dollar industry as a whole would need to push for greener energy in order to succeed correct? I do not think it is necessarily about bottom line today, but long term success which far outweighs the difference.

[Wayne 962]

Originally Posted by cstreit

Wayne they're only buying the electrons generated out of solar. Much of it goes to waste as once they cool down from sitting too long they don't work. Its just extra.

Careful. I had to read that three times. Someone might not get the joke...

-Wayne

[Wayne 962]

Originally Posted by ShopCat

I think the two environmental based arguments are at odds. I see on one had energy consumption will kill Bitcoin, and on the other hand Bitcoin has nothing to do with pushing green energy. If the argument that bitcoin can fail because of its energy consumption and environmental impact is true, then is it not also true that in order for bitcoin to survive, it has to become more environmentally friendly? So miners and the multi trillion dollar industry as a whole would need to push for greener energy in order to succeed correct? I do not think it is necessarily about bottom line today, but long term success which far outweighs the difference.

You're kindof making my argument that Bitcoin, as version 1.0.0 is a good first try, but will probably not be viable for the long run. Do you really think that BTC miners will voluntarily pay more for electricity because it's green? 99% of everyone in BTC these days is in it for the money. Capitalism at work (I'm a fan of capitalism). But that won't push green energy, not by a longshot. And we haven't even really discussed the mining half-point that happens next year. At that point, presumably, mining will become 1/2 as profitable as it is today.

-Wayne

[ShopCat]

Well we are seeing miners choose more costly energy now with this investment in TX mining. The pressure of society will continue to push it greener IMO.

You presume it will become half as profitable, but mining is self regulating, difficulty adjusts about every two weeks up or down. If it becomes unprofitable and miners stop working it adjusts until it is profitable again automatically, talk about capitalism at work! It finds the equilibrium always, automatically, without fail. Another reason why it could never go away IMO. Has mining ever in the past become half as profitable? Seems like it has only gottne MORE profitable.

I agree though that a lot of speculators are in the market, I am happy to see the dip liquidate so much leverage, its healthier now. I don't think its even close to 99% though.

[Wayne 962]

Here's an article that supports my viewpoint that this whole "Bitcoin will spur clean energy" argument is complete BS. This is from today's WSJ:

https://www.wsj.com/articles/bitcoin-miners-are-giving-new-life-to-old-fossil-fuel-power-plants-11621594803?st=pk61r6usiozncb8&reflink=article_email_share

Bitcoin Miners Are Giving New Life to Old Fossil-Fuel Power Plants

The lofty prices of cryptocurrencies have investors sinking money into electricity generation, risking a backlash




Across America, older fossil-fuel power plants are shutting down in favor of renewable energy. But some are getting a new lease on life—to mine bitcoin. In upstate New York, an idled coal plant has been restarted, fueled by natural gas, to mine cryptocurrency. A once-struggling Montana coal plant is now scaling up to do the same.

The lofty price of bitcoin and other cryptocurrencies has investors pouring money into power generation—and risking a backlash. Elon Musk tweeted last week that Tesla Inc. would no longer accept bitcoin as payment for vehicles over concerns about fossil-fuel use in bitcoin mining. That rocked the market; bitcoin prices are now down around 25% since last week.

The drive for power has its roots in bitcoin’s intractable mathematics: To operate securely, the cryptocurrency’s network relies on computers solving puzzles; in return the solvers get fresh bitcoin. The higher the bitcoin price, the more of these miners compete to solve the puzzles—a process that chews up electricity. The more competition, the harder the puzzles get and the more electricity is used.

A University of Cambridge index pegs the annual power consumption of bitcoin mining at around 130 terawatt-hours, more than three times higher than at the beginning of 2019. That would be more than the power consumption of Argentina.

The coal-fired Hardin Generating Station in Montana had been struggling for years. Late last year, a Nasdaq-listed miner called Marathon Digital Holdings Inc. MARA -4.57% partnered with Hardin’s owner to transform the power plant into a hub for mining bitcoin.

“It was an idle asset,” Fred Thiel, Marathon Digital’s chief executive, said in an interview. “We were able to get access to a large amount of power at a very attractive price.”

The project is in the process of scaling up, with more than 100 megawatts of power capacity planned. Marathon Digital, whose investors include BlackRock Inc. and the hedge fund Renaissance Technologies LLC, said that by tapping the Montana coal plant, its break-even costs to produce a bitcoin will fall to $4,600, 38% less than previously.

The company is aiming to produce at least 55 bitcoins daily by the first quarter of next year, up from an average of two a day in 2020.

Besides mining bitcoin, Marathon Digital said that as of March it had nearly $300 million worth of bitcoin on its balance sheet, in an effort to signal its confidence in bitcoin’s future and attract institutional investors to the stock who might want exposure to the cryptocurrency but were unable to or unwilling to invest in it directly.

BlackRock and Renaissance declined to comment.

One of the most ambitious—and controversial—projects comes from private-equity firm Atlas Holdings. Based in Greenwich, Conn., the firm specializes in turnarounds of troubled companies. It bought the Greenidge coal-fired power station in 2014 after the plant in Dresden, N.Y. had been shut a few years earlier because it was economically unattractive to operate.

Atlas first converted the plant to natural gas from coal. Then, last year, it launched a data center for mining bitcoin using power the plant generated. The company said it currently has 19 megawatts of mining capacity and plans to raise it to 85 megawatts by the end of 2022.

Yvonne Taylor, vice president of the environmental nonprofit Seneca Lake Guardian, said air pollution and water runoff will damage a small community whose fresh air and clean water enables tourism, agriculture and fishing in the Finger Lakes.

Last month, local campaigners led a march to the gates of the power plant, and some groups have written letters to New York’s Department of Environmental Conservation and Gov. Andrew Cuomo urging them to revoke the plant’s permits.

The state has declined to do so. Last month, however, the Department of Environmental Conservation said it was closely monitoring Greenidge’s planned expansion. It said it also would consult the U.S. Environmental Protection Agency about the facility’s greenhouse-gas implications.

Greenidge said in March it was going public through a merger with Nasdaq-listed Support.com, which provides outsourced customer-support services. Under the deal, Support.com shareholders would get 8% of the combined company’s shares.

In exchange, Greenidge said it would use the cash on Support.com’s balance sheet to fund its expansion. There’s another potential benefit as well: Support.com has more than $145 million in federal net operating loss carryforwards, which could significantly lower the combined company’s taxes if the bitcoin operations prove to be profitable going forward.

Greenidge didn’t respond to a question on the potential tax advantages. It said last week it would begin purchasing voluntary carbon offsets and invest a portion of its mining profits in renewable-energy projects. Besides mining bitcoin, Greenidge said the power plant continues to send electricity to the grid.

“Greenidge has transformed an old coal-fired power plant into a clean, reliable source of power for thousands and an integrated data processing center mining bitcoin,” the company said in written response to questions. “We are grateful to enjoy great support from the local community.”

Support.com declined to comment.

The project has drawn the attention of state lawmakers in Albany, where a bill under review would place a three-year moratorium on crypto currency mining amid emissions concerns.

“New York is literally the world’s headquarters for finance,” said state Sen. Kevin Parker, a Democrat who sponsored the bill. “But we also want that to be done in a way that comports with our values.”

The proposal is a problem for Michel Amar, the CEO of Digihost Technology Inc. In 2015, Mr. Amar and his son began building out mining capacity in northwest New York state, hoping to take advantage of cheap, clean power that comes from hydro generation around Niagara Falls.

Their company produces more than 30 bitcoins each month, and gets more than 90% of its electricity from hydro power.

This year, amid the bitcoin price surge, the company announced it would also buy a 60-megawatt natural-gas plant north of Buffalo, N.Y. It plans to initially direct 35 megawatts toward bitcoin mining while also sending power to the grid when it’s needed.

Mr. Amar said the company would partly fuel the plant with natural gas derived from animal manure and other sources.

At the same time, he said the company is considering leaving New York if the moratorium is imposed, potentially setting up shop in other states or Canada.

“What is the difference between a data center processing for Amazon and a data center for bitcoin?” he said. “Our goal and commitment is to be green as much as we can.”

[island911]

Feed the machine!

Wow. So much energy to create new markers, that then need more power to maintain.

[dewolf]

Originally Posted by Wayne 962

I call BS on that. The only way that would / could happen was if they were installing new electricity *generation* capability as part of the construction of the site. Otherwise, they are just taking existing electrical supplies off of the grid. As far as I know, there is no "excess" electrical capacity just sitting around in Texas - if you "take" the power from somewhere else, replacement energy will have to be generated using traditional carbon-based methods.

I invite someone to argue the opposite, perhaps there's something I haven't thought of...

-Wayne

I'd agree. It is a Chinese company after all.

[ShopCat]

Originally Posted by Wayne 962

Here's an article that supports my viewpoint that this whole "Bitcoin will spur clean energy" argument is complete BS. This is from today's WSJ:

https://www.wsj.com/articles/bitcoin-miners-are-giving-new-life-to-old-fossil-fuel-power-plants-11621594803?st=pk61r6usiozncb8&reflink=article_email_share

So these are old coal plants, converted to natural gas in the past, now partially used to mine BTC while partially used to power to the grid when needed correct? I don't see how this supports your viewpoint anymore than mine. How do these three plants which are still on the main grid supplying power while mining when the grid power is not needed argue that BTC doesn't spur clean energy? It says right in the article they purchase voluntary credits and a portion of revenue goes toward renewable research. Also in the article it says one of the companies has been operating a hydro plant for years for mining. Also didn't you say earlier there is never excess power? Because it seems this article suggests their is, I mean of course there is since we have peak power hours and energy is very difficult to store.

https://nymag.com/intelligencer/2021/05/jack-dorsey-says-bitcoin-is-climate-friendly-is-he-right.html

https://assets.ctfassets.net/2d5q1td6cyxq/5mRjc9X5LTXFFihIlTt7QK/e7bcba47217b60423a01a357e036105e/BCEI_White_Paper.pdf

Solar and wind are competing to be the cheapest form of energy production in most of the world, that is a fact. Logically I dont see how you could argue then that BTC would not move to the cheapest form of energy long term.

[Wayne 962]

Sorry, I get that you're a big fan of Bitcoin, but using more energy to mine Bitcoin than the entire country of Argentina is simply a colossal waste. In the end, it doesn't matter if it uses green energy or not, because it will be taking green energy away from other uses. The article details, old, obsolete coal plants being brought back online to mine Bitcoin. I certainly wouldn't believe or trust *anything* that Jack Dorsey says for one thing.

https://fortune.com/2021/04/20/bitcoin-mining-coal-china-environment-pollution/

How much Bitcoin comes from dirty coal? A flooded mine in China just spotlighted the issue - April 2021

One of the great Bitcoin unknowns has long been the amounts being produced, or "mined," in what's believed to be the top locale for mining the signature cryptocurrency: China's remote Xinjiang region. We got the answer when an immense coal mine in Xinjiang flooded and shut down over the weekend of April 17–18.

The blackout halted no less than one-third of all of Bitcoin's global computing power. "We'd seen estimates that high, but this shutdown confirms them," says Alex de Vries, an economist who runs the website Digiconomist, which tracks Bitcoin's energy consumption. "We also learned that the area in Xinjiang where all that mining happens is much smaller than previously believed. It underscores China's dominance in Bitcoin mining, and that dominance raises big security concerns."

The Xinjiang accident highlights that Bitcoin is a creature of fossil fuels—principally coal, the dirtiest of them all. Its rise is even providing a lifeline for the fading natural-gas industry. In the U.S., miners from New York State to Kentucky are repurposing obsolete facilities to supply the cheap power they cherish. That Bitcoin spreads a carbon footprint bigger than Australia's, and that the run-up in its price could triple the carbon dioxide it spews, so far doesn't seem to bother the famous otherwise-green enthusiasts feeding the craze, from Elon Musk to Gwyneth Paltrow.

On April 11, the first news reports emerged that the Xinjiang mine had flooded, trapping 21 workers underground. The miners were rescued, but over the following weekend, authorities reportedly halted production while conducting a safety check, stopping shipments to power plants and causing a blackout. By de Vries's estimates, the "hash rate," the pace at which miners run algorithms to compete for fresh releases of Bitcoin, plummeted around 35%. Some in the Bitcoin community blamed the upheaval for hammering the price of the cryptocurrency by 14%, from a record $64,000 on Friday, April 16, to $55,000 on Sunday the 18th.

[Wayne 962]

https://financialhorse.com/bitcoin-mining-explained-going-green-in-the-future/

Bitcoin Mining Explained! How much Electricity do you need?


In the early days of Bitcoin, anyone with a laptop had enough processing power to mine and earn thousands of BTC as a reward. But as it grew in popularity, more miners wanted in, setting off an arms race to amass computing power.

It started when a few crafty miners realised graphic cards typically used for video games were a more effective for mining. Soon, the rest of the pack caught up, leading miners to devise new ways to gain an edge.

...

A Sustainability Issue – Crypto Going Green

Bitcoin is anti-efficient by design. The difficulty of mining blocks is what makes it secure. Factor in the cost of electricity, investments in specialised equipment, and the costs quickly add up.

Then there is the environmental cost. Millions of computers trying to solve complex mathematical puzzles uses a ton of energy. And you also have to factor in the energy wasted by computers that lose the race.

As such, it’s estimated that the carbon emissions from one Bitcoin transaction is equivalent to 735,121 Visa transactions.

If Bitcoin was a country, it would rank in the top 30 in terms of total energy consumption. It makes for a good headline: “Bitcoin consumes ‘more electricity than Argentina’”. Making things worse, 61% of bitcoin mining is powered by fossil fuels.

About 70% of Bitcoin mining takes place in China. This activity is concentrated in rural areas, where miners have access to cheap, coal-powered electricity and undeveloped land to house servers.

Mining bitcoin using renewable energy could eliminate its carbon footprint. For example, some activity takes place in China where low-cost hydroelectricity is available. Bitcoin proponents, such as Square CEO Jack Dorsey, believes cryptocurrencies will eventually go green. To accelerate this transition, it launched a $10 million fund for companies making bitcoin mining more energy-efficient.

Still, it boils down to incentives. Bitcoin’s decentralised network is a double-edged sword. Mining activity will concentrate where electricity is cheapest. Currently, that includes sources with high carbon emissions, such as coal.

The alleged incident involved an immense coal mine in Xinjiang being flooded and shut down over the weekend of April 17–18. The blackout halted no less than one-third of all of Bitcoin’s global computing power.

Bitcoin mining is in large part being fuelled by Coal, and the huge demand and spike in price, is pushing pollution and carbon emissions to unsustainable heights.

Key takeaway:

And you also have to factor in the energy wasted by computers that lose the race.

-Wayne

[aigel]

I have to chuckle about this

To accelerate this transition, it launched a $10 million fund for companies making bitcoin mining more energy-efficient.

. If a significant portion of the cost to mine crypto is energy, you really shouldn't need to incentivize anyone further. Plus, $10M is a joke sum for a fund that is supposed to help change anything in an entire industry.

Have we talked about the plants in Iceland and other areas where there is geothermal power being used which otherwise would go unused?

The whole bitcoin craze is absurd to me. I am always amused when I see renderings of golden coins with a B on them in news articles. Great thread, a lot of good discussion with links to good reading. Reminds me of the real estate thread 15 years or so ago.

[ShopCat]

Originally Posted by Wayne 962

Sorry, I get that you're a big fan of Bitcoin, but using more energy to mine Bitcoin than the entire country of Argentina is simply a colossal waste. In the end, it doesn't matter if it uses green energy or not, because it will be taking green energy away from other uses. The article details, old, obsolete coal plants being brought back online to mine Bitcoin. I certainly wouldn't believe or trust *anything* that Jack Dorsey says for one thing.

https://fortune.com/2021/04/20/bitcoin-mining-coal-china-environment-pollution/

It's only a waste to YOU. We are US citizens, on a classic car forum at that, to the majority of the world most of what we do is a waste. Gaming still consumes as much energy as bitcoin, but I haven't seen 50 articles comparing computer gaming energy to Switzerland or Argentina lol.

I think this is the current system doing everything it can to slow down a threat. If there is value to someone then it is not a waste to them, you happen to be in the controlling majority on your consumption, so you don't see it as waste. You don't see the stock market as waste, or the banking system as waste, but someone somewhere does. Probably many millions if not billions of people. Does anyone care how much energy is consumed to make the stock market work? Has anyone even cared enough to ever compute it? Is there a figure out there that has a net energy use of bitcoin market that would otherwise be used in the traditional system, most of which would probably be gold holdings?

I accept that energy will be spent on financial systems, and I happen to think bitcoin is worth the energy, and probably the better system, and hopefully it gets greener, but how green is the current system? How green would BTC need to be to be acceptable? Seems your response would be it will never been acceptable, as its always taking energy from something else. Obviously your mind is made up, so I'll just have to let it go. But as long as people find value in it it's never going away.

[Wayne 962]

I'll stand by my previous statements. Bitcoin is a fringe technology, used pretty much only by speculators, is not used for hardly any practical/legal commerce, and the support of this fringe system uses more electricity than the entire country of Argentina. As with most people arguing about random stuff these days, it comes down to "Scope and Scale". In this case, the scope of Bitcoin's usage is minuscule, yet the scale of it's energy usage is obscene, particularly in relationship to the scale of the other systems that you quote - namely the stock market, which is utilized by millions, if not billions of people to aid in the flow of capital. It does not make any sense to compare the current energy usage of the stock market (which stock market are you referring to in particular?) to the current energy costs of Bitcoin.

It is important to note that my comments / statements apply to Bitcoin only at this time. As I have said several times already in this thread, I believe that Bitcoin is version 1.0.0, and will go the way of MySpace, Netscape Navigator, and the Yahoo Directory. The blockchain is a very good idea, and some type of new platform in the future that fixes all of Bitcoins inherent and built-in problems will probably surface to supplant it.

-Wayne