Bitcoin crash coming?

[Wayne 962]

The El Salvador thing seems like an incredibly silly thing to me - almost like a PR stunt to get more attention? The reality is that the transaction costs for Bitcoin are so high - especially compared with transactions in a 3rd world country like El Salvador - that this doesn't make *any* practical sense? In order for something to work with a small 3rd world country, it would have to be robust, stable (which it's not), and also very, very cheap to process transactions / micropayments. Bitcoin is the opposite of this. Plus who in a 3rd world country is going to know / learn about Bitcoin and actually use it to buy groceries?

Basically, all of the articles I've read on this topic have pretty much said the same thing...

-Wayne

[ShopCat]

Originally Posted by Wayne 962

The El Salvador thing seems like an incredibly silly thing to me - almost like a PR stunt to get more attention? The reality is that the transaction costs for Bitcoin are so high - especially compared with transactions in a 3rd world country like El Salvador - that this doesn't make *any* practical sense? In order for something to work with a small 3rd world country, it would have to be robust, stable (which it's not), and also very, very cheap to process transactions / micropayments. Bitcoin is the opposite of this. Plus who in a 3rd world country is going to know / learn about Bitcoin and actually use it to buy groceries?

Basically, all of the articles I've read on this topic have pretty much said the same thing...

-Wayne

I think you are looking at this from an American point of view and not a third world country point of view. Seriously, why wouldn't a poor country take the chance of being on the forefront of this? I mean really... its still completely asymmetric risk for them to embrace it and make it legal tender. What is this costing them vs what are the possible outcomes? A lot of people cannot think from this point of view until looking in hindsight. What are the risks and costs, and what are the possible outcomes? Where are you now, where do you want to be?

You have not digested anything from the pro side of the arguments if you don't know "who in a 3rd world country is going to know / learn about Bitcoin and actually use it to buy groceries." I have shared already how Venezuelans are transacting millions of USD of BTC peer to peer WEEKLY because their currency is in hyperinflation. They have anywhere from 20-250% inflation MONTHLY. Their government tries to set prices, as if they have any clue what they are doing. BTC is their way around the poor govt control. It may not seem like it but BTC volatility is decreasing steadily as it rises in price, it will find its equilibrium. I agree with you, for developed countries it probably won't be an every day tx currency, unless fees can be dropped to like 3% like CCs. There will be something built on the back of BTC for that. But its most likely use will be to replace the USD as the trusted world reserve currency.

[Wayne 962]

While your arguments make sense on a theoretical level, on a practical level, accepting Bitcoin doesn't make sense for a country like El Salvador. It's a lot of work and technically difficult for businesses to accept a different form of currency and then have it converted back to their own currency (which they then use to buy products and pay employees). Firstly, the costs associated with accounting for different currencies are large, and also the Bitcoin transaction fees combined with any "exchange" fees into local currencies will be large as well.

As for citing Venezuela, it's a failed country with a failed economic system grasping at everything and anything that might work against hyperinflation, no matter what the costs and downsides. I would concede that a crypto would work okay (not great) in a desperate situation like this, but it's hardly an argument for wide-scale adoption.

In my objective opinion, I have not yet heard any real-world compelling arguments for the wide-spread real-world (non-illegal) adoption of crypto currencies. In fact, the momentum appears to be shifting - China arresting 1,100 people for laundering through crypto, Tesla/Elon's abandonment of Bitcoin, the backwardation of the Bitcoin futures contracts, etc. The *only* thing backing Bitcoin is the momentum of people supporting it, and other than the El Salvador news this week, it's been pretty much all bad.

-Wayne

[ShopCat]

I think people see what they want to see. Plenty of positive stories coming out all the time, mostly to do with adoption, and plenty of negative, mostly lazy recycled arguments we have seen over and over again while people gobble them up as news worthy. Seriously, front page new for China banning something they have banned every 3 years for the last decade? No but this time they really really mean it! lol. Sorry but I have seen the exact same negative arguments from 2013 in 2017 and now 2021 and the market does not care in the long run. So while anti coiners and newbies freak at "news" I chuckle and keep buying. If you aren't at least learning about the tech and holding something as an experiment, you are a dinosaur.

[Wayne 962]

Originally Posted by ShopCat

Plenty of positive stories coming out all the time, mostly to do with adoption

Please post them if you have them.

Originally Posted by ShopCat

If you aren't at least learning about the tech and holding something as an experiment, you are a dinosaur.

I find it interesting, and I certainly would "experiment" and hold some, etc., but morally I cannot since I think Bitcoin and the current state of crypto is a disgusting and ridiculous waste of natural resources. Makes my blood boil just thinking about it - multiple nuclear power plants are turning out radioactive waste and coal plants are being restarted just so some people can speculate on it.

Article here for those who are not informed: https://fortune.com/2021/05/13/musk-bitcoin-mining-bad-planet-heres-how-bad/

-Wayne

[ShopCat]

Everyone has their opinion on the "waste" of the resources, its up to everyone to decide for themselves what is "waste" and what is not. Glass houses and all that.

in about 3 minutes:

https://www.aljazeera.com/news/2021/5/20/us-treasury-wants-crypto-transfers-above-10000-reported-to-irs
https://www.cbsnews.com/news/el-salvador-bitcoin-legal-tender/
https://www.thestreet.com/crypto/bitcoin/politicians-from-these-countries-have-called-for-bitcoin-adoption
https://news.bitcoin.com/spain-prepares-for-tax-returns-season-with-crypto-traders-in-sight/
https://news.bitcoin.com/denmark-tax-law-cryptocurrencies/
https://finance.yahoo.com/news/bitcoin-is-officially-a-new-asset-class-goldman-sachs-103540636.html?guce_referrer=aHR0cHM6Ly93d3cuZ29vZ 2xlLmNvbS8&guce_referrer_sig=AQAAAJC7TURqa9c1EDMgJ9xDw8poxj1N G3kFlsBIxIOj-FDrN9e6h1a_YM93GSBNb0PNdTFszKv7B4Q81b77EKhZYqra3Bw ccDm4UJbwqUF4JAs0LQc0qwEwGxx8rWjsXu0senC_V5m_5ufyx VRXg5djDg0zd9rNvEV7JIDxcCuYv9KY&guccounter=1
https://www.thestreet.com/crypto/bitcoin/paypal-to-start-allowing-bitcoin-withdrawals
https://decrypt.co/73283/texas-allow-state-banks-hold-bitcoin

Edit: also, im not anti nuclear power either....

[Wayne 962]

In case anyone missed it, this week, the Basel Committee (which includes the Fed, and the ECB) this week made the recommendations to set reserves for banks holding Bitcoin to be at 100% the face value of the Bitcoin. I.E. for every Bitcoin "held" by the bank, it would have to have an equivalent in dollars, euros, etc. This means that they value any crypto as a super high-risk asset that has no intrinsic value on the balance sheet. This didn't get a lot of press this week (along with the 1,100 "money launderers" in China), but this doesn't really seem to bode too well for mainstream adoption?

-Wayne

P.S. except for the Goldman article and the El Salvador news, the articles above seem to be mostly negative? (The PayPal one seems neutral).

[ShopCat]

If you don’t understand why the US government announcing business crypto transfers of more than $10k in value must be reported is positive for crypto idk what to tell you. How that can possibly seen as a negative is beyond me. Tax law is step one… as a (former) CPA I see it as necessary for acceptance.

[Sooner or later]

Hmmmm

https://news.google.com/articles/CAIiEGIkyJl54pqkTvuQLC8McjgqGQgEKhAIACoHCAow4Zn5Cj Cu8uACMLTRlgY?hl=en-US&gl=US&ceid=US%3Aen

The Federal Reserve is taking what may be the first significant step toward launching its own virtual currency, a move that could shake up banks, give millions of low-income Americans access to the financial system and fortify the dollar's status as the world’s reserve currency

[Wayne 962]

The IRS making that assertion (on the crypto transfers) means greater scrutiny is coming - which is exactly what most illicit users of crypto are trying to avoid...

-Wayne

[ShopCat]

Once again, how i that negative for BITCOIN?

IMO your entire viewpoint on the subject is twisted in preconceived bias. I'm finding it hard to be blunt enough in this conversation, which is usually not an issue for me. You need to strip your view down and start over on this one, if you end up at the same place so be it but your reply was basically nonsensical.

There is no logical thought process that leads one to believe this government scrutiny and taxation is negative for a currency's path to adoption. Basically the same rule applies to dollar transfers of over $10k.

From that specific IRS agenda, a direct quote, “Despite constituting a relatively small portion of business income today, cryptocurrency transactions are likely to rise in importance in the next decade, especially in the presence of a broad-based financial account reporting regime.”

[Wayne 962]

Originally Posted by ShopCat

IMO your entire viewpoint on the subject is twisted in preconceived bias. I'm finding it hard to be blunt enough in this conversation, which is usually not an issue for me. You need to strip your view down and start over on this one, if you end up at the same place so be it but your reply was basically nonsensical.

Ironically, I feel the same way regarding your evangelicalism with respect to the current set of cryptocurrencies. This closely echoes the one-sided viewpoints that are discussed on the reddit forums (good luck having a balanced conversation there). Crypto fanboys are blind to all of the obvious problems, high transaction costs, downsides, and faults of the current set of crypto currencies. In my opinion, these cryptos are version 1.0.0 and as such, will most likely go the way of Netscape Navigator and MySpace once the next version (like Facebook and Google Chrome) comes along. I'm not anti-crypto at all. I'm anti-crypto version 1.0.0, which is an "environmental scourge on the planet". I'm looking forward to the 2.0 version (perhaps the next version of Etherium) that will hopefully solve a bunch of these issues.

According to the Intelligencer:

The more widely accepted view at the moment is that bitcoin is an environmental scourge. There is no question that the network requires a lot of energy to function: Its core appeal is security, and the network is secured by millions of super-powerful computers constantly competing to solve difficult math problems. Those computers require huge amounts of electricity. According to the IEA, bitcoin mining consumed 50 to 70 terawatt hours in 2019 — roughly as much as a small wealthy nation like Switzerland, which consumes some 63 terawatt hours annually. But it gets worse: The Cambridge Bitcoin Electricity Consumption Index, a metric tracked at the University of Cambridge’s Judge Business School, indicates that the total could surge to more than 130 terawatt hours this year if miners continue at their current rate. By comparison, companies like Microsoft and Google used 10 and 12 terawatt hours of electricity last year; worldwide, data centers (excluding cryptominers) consumed 250 terawatt hours, according to data compiled by Eric Masanet, who leads Northwestern University’s Energy and Resource Systems Analysis Laboratory. Electricity consumption is, most of the time and in most of the world, strongly correlated with carbon emissions, as we still tend to get our energy from burning hydrocarbons. That is certainly true at a national level in China, which burns more coal than any other country. It is also where most bitcoin mining takes place.

This indeed is an insane environmental mess due to a "currency" that a small number of crooks, hackers, drug dealers and human traffickers use. The rest of the users are simply speculators.

Eh, maybe I'll be wrong, and you'll be laughing at me as you drive by in your Lamborghini bought by proceeds from your crypto gains. But I will happily wave back, knowing that I didn't contribute to destroying the planet just to make a buck.

-Wayne

[ShopCat]

The hyperbole (and hypocrisy) in your response is ridiculous lol. China is also the leader in hydropower, and bitcoin miners in their largest hydro region are using energy that would otherwise be wasted in high flow months. Its estimated 40-50% (and growing!) of total mining is done with renewable energy, some of which is literally excess unused energy. So its not black and white like you want so badly to believe. You are working so hard to ignore half the argument then pretend like Im evangelical, I recognize the problems BUT I also recognize the solutions.

"Eh, maybe I'll be wrong, and you'll be laughing at me as you drive by in your Lamborghini bought by proceeds from your crypto gains. But I will happily wave back, knowing that I didn't contribute to destroying the planet just to make a buck."

You clearly cannot (or most likely, don't want to) comprehend what is happening or what the goals of bitcoin and cryptocurrencies are if this is your response. Also, I'm sorry, isn't your entire life motorsports??? Enough with the virtue signaling lol This conversation is going nowhere and its impossible to argue vs hyperbole so I guess this thread has run its course.

[Wayne 962]

Just so people are not misled, here's an article that documents the recent loss of 1/3 of all Bitcoin processing power when China's

"How much Bitcoin comes from dirty coal? A flooded mine in China just spotlighted the issue"
https://fortune.com/2021/04/20/bitcoin-mining-coal-china-environment-pollution/

-Wayne

[red-beard]

It's kinds of funny, I own Landfill Gas to Electricity projects. As they fall of their 20 year PPAs, the market price for the power is very low. So these units are shut down and the landfill gas is simply flared.

What I suggested to my partners was to install a Bitcoin Mining rig and use the power (3.2 MW) for Bitcoin Mining. And this was back when Bitcoin was trading about $8000. The effective value for the power at Bitcoin $8K, using the equipment for sale at a reasonable price, was about 14 cents per kWh. We would have doubled our yearly revenue, which would have paid off the mining equipment in 7 months.

[red-beard]

Bitcoin today is mining half for the same computing power. But the price is up by a factor of 5. The 14 cents per kWh is now closer to 35 cents per kWh (at around $40K/Bitcoin). Wish we had done it!

[ShopCat]

Originally Posted by Wayne 962

Just so people are not misled, here's an article that documents the recent loss of 1/3 of all Bitcoin processing power when China's

"How much Bitcoin comes from dirty coal? A flooded mine in China just spotlighted the issue"
https://fortune.com/2021/04/20/bitcoin-mining-coal-china-environment-pollution/

-Wayne

Chinas crackdown is more about dirty Bitcoin mining than clean, they are shutting down these coal backed mines and keeping hydro mines open for now. So I believe this is no longer accurate. It also fluctuates greatly, there is no one number as a percent of mining that is green or dirty, because during wet months they migrate to hydro and dry months they migrate to dirty power in china.

[ShopCat]

Originally Posted by red-beard

It's kinds of funny, I own Landfill Gas to Electricity projects. As they fall of their 20 year PPAs, the market price for the power is very low. So these units are shut down and the landfill gas is simply flared.

What I suggested to my partners was to install a Bitcoin Mining rig and use the power (3.2 MW) for Bitcoin Mining. And this was back when Bitcoin was trading about $8000. The effective value for the power at Bitcoin $8K, using the equipment for sale at a reasonable price, was about 14 cents per kWh. We would have doubled our yearly revenue, which would have paid off the mining equipment in 7 months.

This is another example of how BTC mining energy can be misleading, there are many instances where power that would otherwise be completely wasted can be and is used for BTC mining. So like most things, its not so black and white.

[Wayne 962]

That's opinion, with no basis or facts to back it up. Here's an actual article from the South China Morning Post:

https://www.scmp.com/tech/tech-trends/article/3137128/chinas-bitcoin-crackdown-fourth-largest-bitcoin-producing-province

China’s bitcoin crackdown: Fourth-largest bitcoin-producing province joins the country’s moves against crypto mining

- Yunnan, which ranks fourth in China in terms of bitcoin hashrate, has promised to shut down any company in violation of the new rules by the end of June

- China accounts for 65 per cent of the global bitcoin hash rate, according to the Cambridge Bitcoin Electricity Consumption Index

Yunnan provincial authorities issued a notice ordering an investigation into the alleged illegal use of electrical power by individuals and companies involved in bitcoin mining, according to a report by China Securities Journal on Saturday, becoming the latest region to join the country’s crackdown on the practice.

The Yunnan Energy Bureau said it would cut the power supply to anyone illegally using electricity for bitcoin mining as well as for such users that evade electricity bills, according to the report. The authorities will also shut down bitcoin mining operations that may pose a safety risk related to their electricity usage.

Yunnan, which ranks fourth in China in terms of bitcoin hashrate – a measure of the network’s computational power – has promised to shut down any company in violation of the new rules by the end of June.

Yunnan is the latest to join China’s crackdown on bitcoin mining. Inner Mongolia, Xinjiang and Qinghai have also issued notices to shut down part or all of the mines in their regions.

The provincial industry and information technology authorities in Qinghai ordered bitcoin mines to shut on Wednesday and also banned businesses like data centres, industrial parks and power stations from providing cryptocurrency-related projects with land and power, according to a notice cited by state-owned Xinhua News Agency.

The notice was issued after Chinese President Xi Jinping visited the province, where he emphasised the importance of environmental protection.

Inner Mongolia, rich in fossil fuels, started kicking out miners in February and had shut down 35 bitcoin mining companies by the end of April. Officials in Sichuan province, which relies on hydropower, held a meeting on bitcoin mining earlier this month, but did not come to any conclusions about possible policy changes.

Yunnan, which is also reliant on cleaner energy, is the second-largest hydro-power-producing province in China.

The move by Yunnan comes amid Beijing’s continued crackdown on bitcoin mining and cryptocurrency. The State Council’s Financial Stability and Development Committee targeted bitcoin mining enterprises for the first time last month, saying it would “crack down on bitcoin mining … and resolutely prevent the transfer of individual risks to the society”.

China accounts for 65 per cent of the global bitcoin hash rate, according to the Cambridge Bitcoin Electricity Consumption Index (CBECI). Xinjiang
alone accounts for nearly 36 per cent of that, with Sichuan and Inner Mongolia second and third, respectively. Yunnan ranks fourth, accounting for 5.42 per cent of the global hash rate.

Mining bitcoin uses about 111.5 terawatt-hours a year, according to the latest estimate from CBECI, more than the total annual energy used by the Netherlands. The heavy consumption of bitcoin mining clashes with China’s vow to reduce carbon dioxide emissions by at least 65 per cent by 2030, relative to 2005 levels, and then achieve carbon neutrality by 2060.

-Wayne

[ShopCat]

How does this refute anything I said? Also... your source is misleading in the first place.
https://forkast.news/china-yunnan-to-ban-cryptocurrency-mining-source/
https://www.coindesk.com/chinas-yunnan-to-become-latest-province-to-ban-crypto-mining-report

It is unclear what separates an "illegal" mine from one that is "legal." So.... ???

Even with that said, it does not refute that the most hydroelectric producing provinces HAVE NOT shut down mining for now.

Wu Blockchain tweeted again, citing local media reports on Yunnan’s Bitcoin mining clampdown: “Compared with thermal power regions such as Xinjiang and Inner Mongolia, hydropower regions such as Sichuan and Yunnan will be relatively tolerant of Bitcoin mining. But the miners are facing problems after the summer, and electricity supply outside of China may be more stable.”

I'm laying all the info I know out open, its obvious after the wet season is over it may be more bans, or it may be a big PR stunt and they roll back. But contrary to your earlier comments, its clear energy is wasted due to storage and transport issues all the time, while BTC mines are mobile. So they are letting them stay for now in high hydro regions.