Good Morning Everyone,
It feels like the US Political apparatus could be about to go full-blown hysteric-mode toward bitcoin mining, in the face of the energy crisis which for the most part is self-inflicted. In an effort to save face in the minds of those still trapped in normie land, i get the sense they are seeking to provide a political sacrifice to the gods, and bitcoin is on their radar.
The state of New York has passed a bill to ban bitcoin mining, specifically proof-of-work mining. The bill had been in the throws of the political process over a year ago, and initially failed to pass the state assembly last year; however following continued attempts the bill has now passed, and following being signed into law by the governor will see New York, follow China’s lead and become the first US state to ban bitcoin mining.
The purpose of the bill is as follows:
“Establishes a moratorium on cryptocurrency mining operations that use proof-of-work authentication methods to validate blockchain transactions; provides that such operations shall be subject to a full generic environmental impact statement review.”
Whether these actions are genuinely in good faith and with good intentions, and aim to have a positive and meaningful impact on limiting any negative effect on the so-called “climate” boogeyman, or not, is unclear to me at this point, however i’m leaning to it being very unlikely by default based on the historical track record of politicians and central planning generally. What is clear is that regardless of their intentions, the actions taken are phenomenally idiotic, but also deeply concerning; for a host of reasons.
“Miners” are just specialised computers, basically guessing numbers at random. This law is attempting to dictate what you can use a computer for, and is specifically targeting the banning of guessing random numbers.
Anyone running a mining rig, whether it be at home or a larger scale commercial operation is simply running a computer, or a data center, no different to that of Amazon or Microsoft, and are paying for their electricity the same as everyone else. Are we really going to discriminate what an individual or business can use their electricity for? Will the state of New York implement a ban on AWS servers? The hypocrisy is incredible.
Proof-of-work mining is one of the core innovations that underpins bitcoin, and that enables for the first time EVER the property of digital scarcity. Up until bitcoin, everything in the digital realm has by definition been able to be copied in an unlimited way. Until now. Banning one of the most profound innovations of our time seems like a strange action to take, however it is somewhat typical of humans to resist out of fear of the unknown, when they encounter something new.
The reality is, that this is impossible to police, and enforce. It seems much more likely this is political virtue signalling more than anything.
This action incentivises large scale operations to simply move, and move their business revenue along with it to a jurisdiction that respects property rights. This directly harms the state far more than it helps as it removes jobs from the state, as well as revenue. It also likely deters any future operations from being established in the state. Given what a growing industry this is, this seems obviously counter productive.
There is a fundamental malware that exists in respect to this entire energy scam that bitcoin mining is contributing to carbon emissions. Bitcoin mining is simply utilising electricity that is being produced with or without bitcoin mining existing.
Bitcoin mining’s global energy usage is a rounding error. Not literally, but technically; as Lyn Alden explained:
“Bitcoin’s energy usage is a rounding error as far as global energy usage is concerned. And I mean that literally; when scientists estimate that the world uses a certain amount of energy in a given year, they can easily be off by a couple percentage points in either direction, let alone a couple tenths of a percent. Bitcoin is estimated to use less than one tenth of one percent.”
If the climate hysterics are genuinely wanting to solve something they perceive as a problem, it seems fairly obvious this will not do it. Going after something that is a rounding error is going to have no meaningful impact on their announced goal. This point alone strongly brings into question the motive and validity of the states actions toward bitcoin mining.
Just over a year ago China banned bitcoin mining. At the time China accounted for the lions share of the hash rate, with approximately 65% within its borders. Following the ban, the hashrate saw a major crash from 177 Eh/s down to 89 Eh/s. However it has since recovered to significantly higher all-time highs exceeding 220 Eh/s at it’s peak. What is also of note is that while following the initial ban, the hash rate appeared to move from China, a significant share has since returned or simply been switched back on, now accounting for 21% of global hashrate despite whatever action the CCP took.
Most attacks that we have seen toward PoW mining, come interwoven with the line comparing bitcoins evil form of mining versus Ethereum’s righteous version call Proof-of-stake - which it doesn’t even use yet, and at present is simply a theoretical proposal. I even remember seeing an incredible piece of propaganda from the World Economic Forum, showing PoS as a nice “normal” human figure, and the PoW mining character as a criminal. I’ll find it and attach below incase you haven’t seen. It’s important to realise the extent of this attack, as i believe acts like these are designed predominantly to influence you to believe certain ideas, as opposed to actually fixing any real world problems.
As we’ve discussed multiple times, PoS is fiat, and it’s also important to remember Ethereum still does not even run on PoS - it’s a promise that has been incoming for a number of years and we’re yet to even see it in effect. PoS may use less energy, but that is because it is not solving the problem proof-of-work solves. The reason Proof-of-work is so essential, is that it is what anchors the digital system to that of the physical world. It does this by using energy. It is fundamental to the enabling of digital scarcity, because while governments may think they can solve their problems by simply printing more money - you cannot print more energy. Nor can you print more bitcoin.
While it’s a bad precedent for New York to be setting, and there is no doubt a risk of this malware spreading to other states, as we have seen from the China “ban” - bitcoin is an extremely resilient system. It will be interesting to see how the landscape continues to evolve in the US. My guess is that market forces bitcoin creates will win, and that any short term intervention will prove to be just that - short term.
If you live near New York, get your ASICs plugged in and resist the madness.
We are going to win.
Wishing you all well. Have a great start to your week. I’ll talk to everyone tomorrow.
AK
#101 You Can't Print More Energy