Countries with an energy surplus can export crypto tokens, but they can often export more stable and useful things instead (aluminum, for example).
So I'd have to add a stipulation: it's for people in countries where people have access to surplus energy, but don't have access to better ways to export the energy.
What’s the distinction? Of course in both cases when you say “the country has an energy surplus” or “the country can export something” you’re actually talking about people in the country.
> when you say “the country has an energy surplus” or “the country can export something” you’re actually talking about people in the country
I'm not.
In most developed countries, energy is one of the following:
- nationalized
- "privatized" (e.g. Russia, where the companies are partially govt-owned or the oligarchs are Putin cronies)
- privatized oligopoly
In any case, unless the government or the energy company wants to go into mining, the surplus can't just be transferred into mining.
So the question becomes, does the energy surplus actually translate into lower prices for consumers, and the consumers can then convert it into assets?
That's what I meant by "people": do the consumers of the energy actually have a way to monetize the surplus?
Countries with large oil surpluses that they can’t sell because of embargoes because of their nuclear programs which they paradoxically don’t need because they have so much cheap oil.
They are still forbidden from selling that Bitcoin, too. Now, they may do so anyways in violation of international sanctions I suppose but, and I can't stress this enough, I don't think its a good idea for hostile hermit kingdoms to evade sanctions no matter how they choose to do so.
> Now, they may do so anyways in violation of international sanctions I suppose but, and I can't stress this enough, I don't think its a good idea for hostile hermit kingdoms to evade sanctions no matter how they choose to do so.
Because sanctions are for their own good, right? Sanctions aren’t a threat, they are the punishment.
Other countries/companies shouldn’t do business with sanctioned countries, but obviously a sanctioned country can only benefit by breaking the sanctions.
It’s like being in prison in the USA: it’s natural - and in the prisoner’s best interest should they succeed - to try to run away.
> LONDON, May 21 (Reuters) - Around 4.5% of all bitcoin mining takes place in Iran, allowing the country to earn hundreds of millions of dollars in cryptocurrencies that can be used to buy imports and lessen the impact of sanctions, a new study has found.
I think its an investment in future, those who are ahead in this race they are just ahead. The countries that fail to realize this dont have their eyes on the future. Malaysia in this case might be thinking that crypto is a threat to their Islamic Banking model.
I don't know if this addresses your question, but electricity surpluses are exported between countries belonging to the same wide area synchronous grid:
As one CRT trader said: "It's like picking up dimes in front of a bulldozer. You can make a lot of money, but you have to keep your eyes on the bulldozer."
Now there's a name from history. Their business model, selling lots and lots of out-of-the money options and collar trades, is one that people seem keen to replicate in crypto space. Profitable when volatility low, goes bang dramatically when it spikes.
A great trade if you can get enough leverage that someone else is on the hook for much of the downside risk, as LTCM managed.
Also, their famous trade was not actually selling volatility through writing options, but sla convergence trade in government bonds (short the most liquid one, which trades at a premium, get long a very similar bond which has the same cashflows but does not benefit from being blessed with the "most liquid" status). The crypto equivalent here is probably being long stablecoins, though even the best stablecoins have orders of magnitude less backing than Treasuries.
Actually, some proportion of LTCM's portfolio was actually selling volatility on equity options. If I recall this unit accounted for about ~20% of the losses. I think about another 15% came from linear equity arbitrage, mostly long-short positions on cross-listed stocks. Like you said, the bulk was fixed income arbitrage.
It was actually pretty internally controversial when LTCM started selling options in the last year or two before its cratering. The core thesis of the firm was pure arbitrage, where the risk was inherently capped. When the more aggressive faction started pursuing "statistical arbitrages", positions that could lose money but tended not to when repeated long enough, the old-school vanguard from Salomon revolted. Ironically both the pure arbitrage and statistical arbitrage positions got crushed in 1998.
But there's literally no upside to holding stablecoins? By design they don't appreciate, they pay no interest or dividends, they track underlying inflationary currencies like USD, and have a non-zero chance of going boom and becoming worthless.
They're not perfectly stable. The issuer guarantees you something about them: maybe that you can redeem it for $0.95 today (perhaps phrased as $1 minus fees), or $1.0 in a year. So the price will fluctuate a little below $1, based on interest rates, creditworthiness of the issuer, and simple supply and demand. This is exactly like a bond.
The trade is to buy the stablecoin at $0.96 and wait for a chance to sell it at $0.995. Your investment thesis is that someone else is selling at $0.96 not because the issuer is going bust, but because they need the funds for something else.
Exactly. Whenever I see something like this (e.g. Philippines police has also bulldozed some expensive cars recently) I always wonder if they actually are idiots or have extracted the valuable internal parts first.
I suspect big conspicuous destructions like this are the reverse of US asset confiscation; destroying the thing is a signal that you're really serious about stopping it, rather than just confiscating it and letting the police keep the proceeds.
Perhaps there are reasons beyond my understanding why this is a wrong idea but if I were the head of the government I would rather officially sell the machines to a legitimate tax-paying mining operation or (if we are low on electricity and don't want any mining in the country) sell them on eBay to whatever a foreign party interested to get the funds for the budget. If the hardware would appear at an illegal mining facility in the country again I would just confiscate and sell them again making even more funds for the budget.
"Hello, Dear Sir! I am most foreign of foreigners, wishing to buy your Bitcoin Printing Mint Equipment, paid in your local currency, for export out of your fine country."
"... really? You're the guy we seized these from, holding your finger under your nose like a mustache. To cover your mustache."
If you object to the entire principle (or, at least, need to be seen objecting to the entire principle), destroying the assets in a visible public spectacle is the way to go.
California had at least some high profile "street racer" destruction back in the day, and I don't believe any western government, upon seizing a big load of cocaine, goes about trying to figure out how they can unload it to someone else. At least, in easily tracked ways...
Ok, let them buy it again and seize it from them again if they use it unlawfully. Double profit.
> seizing a big load of cocaine, goes about trying to figure out how they can unload it to someone else
Because there is an internationally agreed war on drugs. Cocaine (unlike meth which can be officially prescribed as Desoxyn in the US and heroine which also is used medically in some cases e.g. in the UK) is officially considered pure evil with no legitimate medical use (it can be used for good but in practice 99.9% of its use is abuse and even the 0.1% who use it for good also do that illegally).
AFAIK there is no international agreement on fighting cryptocurrencies mining so far, the mining equipment (let alone the power supply units) are perfectly legal to manufacture, sell, buy, own and use (unless you actually steal electricity to power them) in many countries.
Even such a totalitarian and unreasonably conservative country as Iran officially allowed (and taxed) mining until they found out they are running low on electricity.
> Cocaine (unlike meth which can be officially prescribed as Desoxyn in the US and heroin which also is used medically in some cases e.g. in the UK) is officially considered pure evil with no legitimate medical use
This isn't true at all; cocaine is a Schedule II drug, not a Schedule I like marijuana. It has historically had plenty of medical use.
Did I say it does? It might. But what you said was that it is "officially considered pure evil with no legitimate medical use". There is an official schedule of drugs organized by how evil they are and whether they have a medical use. Cocaine is listed as having medical use. This is, to the maximum possible extent, the official opinion of the United States. Where are you getting your official statements from?
This is why you’re not a head of government. Heads of government realize that a public display of power and consequence is much more valuable than a few hundred K revenue that you can shake down out of anyone.
My point was things seem to be going the opposite of what you're wanting. More and more things seem to be contracted out to different companies. Warfare/mercinaries is a big area, however, jails are another.
We do this here in the US too. Grey market cars that are imported and don't meet US emissions get crushed. People caught street racing have had their cars impounded and crushed. It's just to make a show.
Yep. I have a buddy who works at $BIG_US_RETAILER and he weekly has to go into the stock room with a box cutter and scissors to destroy unsold clothing.
I have also heard big box retailers (i.e. Best Buy) will destroy unsold items to discourage employees from purposefully hiding or down-selling things in the hope they can grab it for cheap or free.
Though a lot of places will unload these items to wholesalers or discount retailers, and some gets donated to clothing charities. It goes through a few steps first.
This feels like such a waste. Yeah, let's destroy electronics (when there is a silicone shortage) and let's destroy clothing (when a large percentage of the people in the world walk around in rags).
Makes me unbearably sad we're such a wasteful species.
I wonder if this is also the case in Singapore - the only known good dictatorship in the world where the leader could have easily banned this behaviour.
Yeah, but this is the equivalent of bulldozing a house because someone committed a crime in it. Sure, I get you're serious, but I also get you're being wasteful.
I think they also said that they knock down houses that have illegal electricity connections to steal electricity - this punishment is probably just the equivalent
On the other hand big destructive displays like this are big signals that it’s not police corruption and theft (like with the perverse incentives “civil forfeiture” creates in the US)
My personal view is that the government should never be able to profit from prosecuting a crime. Law enforcement should never be a money making venture, and it would never be possible to implement a system that overcomes the perverse incentives so long as it is.
I don't think the financial disincentive is necessarily corrupt, in the form of fines or asset forfeiture, but I think that they should never be allowed to contribute to government revenue in any way.
If the government has any incentive to prosecute somebody, other than a well founded and provable basis for believing they committed a crime, then the justice system just becomes a weapon to turn against the citizens it's supposed to be protecting. If the government has a financial incentive to prosecute certain crimes over others, then how the law is enforced is not going to align with community needs. For instance, that's why there's never enough police to attend burglaries, but always enough police for handing out speeding tickets.
This. In a corrupt country, not destroying the seized equipment in theatrical fashion makes everybody assume cops/government just took it and used or re-sold it themselves, individually.
Similar reason why drugs are destroyed with a lot of fanfare in most Latin American countries (er, when they are). Surely it'd be easier and cleaner to bury it somewhere after soaking it or something, but no, they need to make a pyramid of drugs and have someone throw a pyre at it to create a big symbolic bonfire that is a toxic mess to clean up.
They can just as easily be signals of corruption. I have a friend who owns a bar on a beach in Malaysia. He isn't willing to pay the requested bribes to the local cops, so every winter they douse it in gasoline and burn it to the ground. He rebuilds every year; it costs less than the bribes.
If you think that's bad, consider that many companies go out of their way to wantonly destroy perfectly serviceable hardware that they produce and/or distribute every day as a matter of routine, all in an effort to mitigate storage costs and, in some cases, artificially prop up demand.
Amazon[1] is probably the most prominent example of this practice when it comes to hardware, but the routine destruction of unsold products remains common across industries, especially the food industry[2][3][4].
I, too, felt ill watching that video, and I felt ill reading these articles. But how do we fix this? How do we avoid letting so much production go to waste, especially when there are still so many people around the world who could really benefit from it? Is it the product of greed, or is it merely a hard-to-solve supply chain problem?
Only a couple of months back I saw what seemed to be perfectly good solar panels (I'd estimate an 8kw system) having a backhoe rip through them (and the roof they were attached to) to make way for a future apartment block.
I'm sure someone would've been willing to salvage those at no cost to the developers, but time is money to those guys. Sad to see such waste.
In the Bay, I more than once saw developers spend months trying to get people to salvage old houses whole. Surely there was someone who would take them! How hard could it be?
Each time they wound up bulldozing them after zero takers were found.
Could they have tried to get rid of them piecemeal, as people came to salvage one useful thing at a time? Definitely possible! Though it likely would have meant managing a bunch of different people looking for specific things, after which they would have had to spend just as much time and money bulldozing the things anyway.
Delays in construction are also waste but not so visceral or visible. It might have turned out that it was cheaper to destroy them than have them salvaged, including the labor cost of managing the salvage.
That requires someone to put in a conscious effort to manage and people are lazy when it's not their money.
Also (thanks in large part to internet commenters, many of whom on HN fit this archetype) people are afraid that a liability waver doesn't cover them when in reality unless there are aggravating circumstances a liability waver pretty much always caps your loss at the consult fee required to get your lawyer to tell the ambulance chaser to f off.
Recycling can only slow the loss of raw materials, not prevent it. So we'll either run out eventually anyway or we won't run out anyway. Your argument doesn't work.
You know they didn't. This is just stupid government officials doing what they do best. Bet they patted themselves on the back afterwards for protecting their community. While in reality by restricting the supply they only increased the incentive for new miners to be built. So all this waste is for nothing and anyway it doesn't solve the problem that theft can be lucrative.
Normally these kinds of seized goods wind up at auction.
You'll have a hard time getting anyone to fess up to it for the same reasons you'll have a hard time getting MBA types to fess up to systematically working employees to the bone but there's schools of management theory that say government should engage in conspicuous waste and/or bad behavior as a way to project power.
Remember this next time you see five cop cars blocking three lanes for a fender bender with two cars parked on the shoulder.
As someone who ran miners like these, I'll just say that the PCI-E rails on these PSUs don't last - especially when they've been run in hot conditions that places like Malaysia are known for.
If we assume that cryptocurrency mining is bad and alternatives like PoS are better then the act of building 1000 cryptocurrency miners wasted those resources way before they were destroyed.
I wonder how could they justified this action under the law. The crime is stealing the electricity. The mining machines are just the assets and it's not an illegal item, It's just a bunch of computers. I guess I can't trust Malaysian law system.
This isn't particularly rare. In fact probably the most infamous civil asset forfeiture is in USA, a country people generally considered relatively "trustworthy". See what the ACLU have to say about it (emphasis mine):
"""
Civil forfeiture allows police to seize — and then keep or sell — any property they allege is involved in a crime. Owners need not ever be arrested or convicted of a crime for their cash, cars, or even real estate to be taken away permanently by the government.
"""
Law in many countries allow the justice system to confiscate items used to perpetrate a crime. Like a car used in a getaway, or a gun used in a murder (regardless of if it was legally owned to begin with).
Sweden even allows the state to confiscate any belongings of a criminal that are “reasonably believed to be the profit of criminal activity” like expensive watches, jewelry or sports cars.
Could obsolete Bitcoin ASICs be used to mount any sort of attack on SHA-256? There’s a huge, huge amount of SHA-256 going on in Bitcoin at the moment - does the ASIC become useless once it is no longer used for Bitcoin, or could it be made to compute SHA-256 for some other nefarious purpose?
I always assume security is worse than the most effective known attack, but IIRC it’s currently thought to be safe against quantum computers: https://eprint.iacr.org/2016/992
2^166 ~= give a separate quantum computer that does as many QOPS as the the most powerful supercomputer does FLOPS to each human who has ever lived and have each of them run for a thousand times the age of the universe.
It reduces the strength of SHA256 to that of SHA128, roughly speaking. 2^128 is still outside any practical reach whatsoever. (Google breaking SHA-1 after cryptanalysis still required some 2^60 operations iirc).
IIRC, a quantum computer reduces preimage attacks (first or second) to the difficulty of collision attacks, but doesn't improve collision beyond the best classical attacks, which can be run on faster and cheaper hardware. It also may or may not benefit from any cryptanalysis applicable to collision attacks. So if you're secure against (classical) collision attacks, you don't need to worry about quantum attacks (collision or preimage).
The main reason that asymmetric (RSA, eliptic curves) encryption are broken (on quantum computers) is simply due to relying on certain assumptions that haven't been fully proven (and instead has been disproven over time).
Symmetric and one-way functions are provably secure, within those characteristics that they define. Notably, they are not designed with "until the end of the universe" promise (and the only proven "until the end of the universe" encryption anyway is a proper one-time pad (or disk) encryption). The reason that certain hashing and encryption algorithms have been broken are due to both compromises inherent in design goals (notably, AES have been simplified from the reference encryption Rjindael to ease up hardware acceleration) and the march of technology simply rolling with faster chips. Quantum computing can speedup this process a bit (a quadratic speedup in most cases), but not enough to outbeat these types of encryption.
The march of technology has done essentially nothing to weaken AES against direct attacks. AES, of course, has not been broken the way SHA-1 and MD5 were.
My understanding is that in the general case you can see a quadratic speedup, so a 256-bit search space would suddenly collapse to what is effectively a 128-bit search space.
Bitcoin's hashcash PoW is not a 256-bit search problem though. At current difficulty levels, it's closer to an 86-bit problem, so Grover's algorithm reduces that to the equivalent of a 43 bit search space.
No, it can't. World uses single round of SHA-256. Bitcoin uses two rounds of SHA-256 for PoW. Since Bitcoin ASICs hardware is optimized really really hard, they are simply incapable of doing a single round SHA-256.
IMHO this design decision was a great call.
EDIT: I'm amazed that for 12 hours nobody could point to that well-known fact. NH crowd really knows little about cryptocurrencies.
The collisions that ASICS search for are a few leading zeros, even with the whole Bitcoin network at your disposal I don’t expect it’s practical to find an exact 256bit collision.
From my understanding, the hardware tends to be burn out faster than it becomes obsolete. So those "obsolete" ASICs aren't reliable enough to do any work anymore.
If there becomes a surplus of power-inefficient hashing gear that is no longer profitable to operate, and the aggregate capability of that "dark" hashing power grows significant compared to the online hashrate, it could be used to carry out a 51% attack. But since ASIC efficiency gains are due to increasing hashrates (with roughly constant power density), this seems unlikely.
Bitcoin asics are basically just ewaste once they’re no longer useful or profitable. Since they’re designed for just Bitcoin there’s not really any other use. You can get older asics first cheap on the secondary market (although most sellers try to scam people not knowing previous generation miners are useless). Maybe useful if you want a unique way to heat a room?
An early step in recycling is usually shredding. It's better to remove big things made of known metals first (like copper wires and aluminum cases), but if they keep it all together it can still be processed.
has anyone ever actually calculated that? like what if we used old ASICs to heat our rooms, would they be more efficient than a heater after accounting for the small number of bitcoin you'd get?
that's not a great way to think. One needs to think if something is possible before trying to solve unrelated issues that some engineering can probably figure out.
Compared to heat pumps? Yes. But compared to resistive electric heating it's just as good (if not better, since you could theoretically recoup some of the burned energy as cryptocurrencies).
Most mining rigs have zero use for anything but mining.
A few mining systems are GPU's (used for mining certain types of crypto), and those can be resold for other uses, although typically after being used for a few years for mining they might be damaged and no longer usable for other uses.
Depends. FPGA-based ones can be purposed for other things in principle, ASIC-based ones probably not, and afaik the latter is what's common for Bitcoin.
One need not waste electricity to have a reliable consensus network. When you don't use Proof of Waste, you don't worry about the government seizing your ASICS. caveat:crypto founder.
Proof of stake, or delegated proof of stake, or proof of authority, they're basically the same thing, and have been working fine for years. caveat: I founded an ETH fork that does this stuff as well. Even ETH itself is working towards ETH 2.0 which also uses proof of stake.
I sincerely hope those were machines with dedicated mining boards and no gfx cards in them. It would hurt to know that they could destroy something whose prices skyrocketed recently for various reasons.
This is an unfortunate side-effect of Proof of work mining. You get advantage if you can obtain large amount of cheap electricity - and steal it before you get caught can be extremely cheap.
If the government sees something as a public Bad[1], they're not going to put it back into the economy.
If the government seizes drugs, they don't just redistribute it because it "makes money."
[1]: Regardless of whether you agree with the government here. I also don't know if bitcoin mining is illegal or if it was just the stealing of electricity that was a problem.
Malaysia has some of the cheapest retail power on Earth.
This is the usual performative nonsense by a foolish government. They could have easily sold them at auction like they do with all sorts of other seized goods. ASIC's go for a few thousand dollars each.
Perhaps it's among the cheapest because it's subsidized as a public good?
EDIT: According to Wikipedia, it's heavily tiered and heavily subsidized, but also that it shouldn't be particularly helpful for mining, unless they're splitting it into a bunch of accounts to stay in one of the lower tiers:
Domestic consumer pricing per kWh used, subsidized
4.95 @ 1 to 200 kWh
7.59 @ 201 to 300 kWh
11.73 @ 301 to 600 kWh
12.41 @ 601 to 900 kWh
12.98 @ 901 kWh onwards
(exchange rate of 4.4 MYR to US$1 on 24 November 2016)
I live in Malaysia. Electricity is not very cheap once you go above 300 kWh. The current tiers (at least on my most recent monthly bill) are as follows:
- RM 0.218 (USD 0.052) per kWh for the first 200kWh
- RM 0.334 (USD 0.079) per kWh for the next 100kWh
- RM 0.516 (USD 0.120) per kWh for the 300kWh after
Those prices are before the 1.6% tax by the government. And furthermore, any usage above 600kWh is taxed an additional 6% by the energy company.
Live in Malaysia too and am always astounded how much power people use here, they seem very wasteful with aircon.
Generally average about 250kwh per month for 2 people in a 1200 sqf apartment with occasional aircon use. Paying ~6c/kwh is much better than nearly everywhere else on Earth. As a westerner in the country it's basically a rounding error compared to other life costs.
With government bonuses that get thrown around the cost really isn't much unless you are incredibly wasteful or have a huge family/house. Most of the country has gotten big power handouts for covid. I paid 30 RM ($7.50 USD) a few months ago. A pint down the pub costs nearly that.
That's simply not true. Electricity prices vary by a considerable factor, even among the cheapest sources. The Bitcoin price is identical, globally. These two can only coexist if there is a considerable margin to be made in mining, allowing for it to be profitable in a relatively wide span of electricity prices (of course still excluding the highest-priced sources, it is not that wide!).
As far as my information goes, there were times when mining a >30k$ coin was possible for less than 4k$ in electricity, if you had access to really cheap sources. That's far from "don't really make much money".
There might not exist a single global market, but whenever the Bitcoin price is different in these markets, there's an arbitrage opportunity. As a silly example, if the Bitcoin price was 4.000 USD in one market and 40.000 USD in another market, you could buy one Bitcoin in the first one, sell it in the second one, and pocket the 36.000 USD difference. Buying Bitcoin in a market increases the price there (suppose there were 10 Bitcoin for 4.000 USD each and 12 Bitcoin for 4.200 USD each, after the first 10 Bitcoin are bought the price is now 4.200 USD), and selling Bitcoin in a market decreases the price there (it's the same dynamic in the opposite direction). After some time, the prices will converge.
That is: as long as arbitrage between the markets is viable (for instance, it must be possible to move Bitcoin and fiat between the markets at a low enough cost), even though there's no single global market, the prices will tend to be close enough.
Bitcoin price is identical globally. The price of bitcoin in USD/GBP/EUR is pretty much the same with respect to the values of each currency. There may be outliers, eg. Venezuela, but that's because it might be priced in the local currency, which is itself inflating at a rapid pace, so it loses value against bitcoin and the dollar or euro
Can "Bitcoin price" be defined as something other than what it's selling for on various exchanges? Right now BTC is going for $31,599 on Bitpanda, $31,384 on eToro, and $30,327 on Coinmama.
Also, because these rigs were apparently using stolen electricity, chances are that the only reason it was profitable for the owners to operate was that they weren't paying market rates for electricity. So there's no way to legalize the operation and make it profitable (either because local electricity costs are higher than world average, or because these particular miners were inefficient, or whatever).
hey super cool my dudes, I'm sure your department or community couldn't use a cool million from some university who wanted to research folding proteins, or any of a number of startups who had some machine learning needs… just the coolest, vroom vroom crunch
The AS in ASIC is “application specific” - unless you’re researching how many kilowatt hours it takes to find a hash with 17 leading zeros, the machines serve little purpose.
I has a similar initial reaction but my guess is it's not really feasible to repurpose these. I think (my knowledge is out of date) that dedicated miners are basically just asics designed to compute hashes really fast (presumably optimized for bitcoin blocks and cycling through a nonce). Unless another useful application is really close to that, you probably can't use them for it.
Looks like ASICs. These are worthless for anything besides mining BTC. Another counterpoint to Bitcoin. Ethereum has protections in place (had, Eth 2.0 changes everything again) to prevent ASICs.
The countermeasures are "uses more RAM than is convenient". The ASIC counter-countermeasure was to add more RAM. The countermeasure was effective for 18 months.
Not PC cases and not PC power supplies, and probably not PC RAM. ASIC-based miners are built like embedded systems. None of these parts could be reused for general purpose computation.
FBA is BFT + decentralization. The F stands for "Federated" in contrast to "just" distributed system which are only physically decentral, federated system also decentralize the control.
The key difference is that it does not need a puzzle (and therefore no resource wasting to solve it) to determine who will write the next block but rather BFT is used to agree on the next block. Its quite elegant compared to the puzzle and obviously way more efficient.
