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I missed the part where this was ever a good project. Cryptocurrency mining has to use the cheapest available power, or else it loses money because the mining

by tlb 8y ago

I missed the part where this was ever a good project. Cryptocurrency mining has to use the cheapest available power, or else it loses money because the mining rewards float at just above the cost of the world's cheapest power. Because many companies prefer renewable power (such as data center operators who want to claim they are carbon-neutral) and there's a limited supply, renewable power will always be at a premium over the cheapest power. A big problem with successful ICOs is that the companies immediately have too many shareholders to let them pivot. The idea could probably be morphed into something that works, but not with 100s of retail shareholders demanding progress on the idea they originally backed.

Havoc 8y ago
If you need to pivot an ICO then it's already game over I reckon.
- lawnchair_larry 8y ago
  This can be shortened to "If you ICO then it's already game over" ICO anything is a really strong signal that nothing good can come of whatever you are reading.
to_bpr 8y ago
>have too many shareholders to let them pivot Token purchasers in ICOs aren't shareholders. >100s of retail shareholders demanding progress on the idea they originally backed. They have no guarantee or protections when buying into an ICO. They may try to pivot and get some disgruntled worthless-token-holders as a result, but if crypto has shown anything it's that even outright scams will maintain an unfortunately strong community of supporters.
- tlb 8y ago
  OK, "stakeholders". Can you point to an example of a company successfully pivoting after an ICO?
  - CPLX 8y ago
    I've seen a few pivot from "what they said they were going to do" to "we just took all your money thx".
  - celticninja 8y ago
    This is similar to how people raising money on crowdfunding sites decide to change/improve the product after beating their targets. This also results in failure usually because they don't deliver the original product and don't really know what they are doing except trying to spend the money they have raised.
  - hapnin 8y ago
    Binance did an ICO last year. They made more money than Deutsche Bank did. But they're the exception in the scamsphere of Ethereum tokens.
mrb 8y ago
«renewable power will always be at a premium over the cheapest power.» That's patently false. The share of global electricity that's going into crypto mining is small enough—less than 0.5%—that it's too small to directly affect the price of renewables. In fact some mining ventures are even starting to build their own private power plants (one example: https://news.bitcoin.com/20mw-solar-farm-set-to-power-crypto-mining-in-rural-australia/ https://news.bitcoin.com/20mw-solar-farm-set-to-power-crypto...) There is no reason why this would increase the cost of renewables. More money, more R&D, more infrastructure deployments will in fact in the long term push prices downward for the rest of us (economies of scale):
- jacobush 8y ago
  Is it only me who considers 0.5% to be shockingly large for doing so little? (Not counting future relevance of crypto coins.)
  - mrb 8y ago
    Why do you think cryptocurrencies do "so little"?
skybrian 8y ago
If electricity were easily stored and transported, you might have a case that renewable power is always more expensive. But renewable power is sometimes generated in inconvenient places or times. For example, the power lines needed might not be built yet, or it might be using the wind blowing at night. Sometimes crypto mining is in the best position to take advantage of that.
- tlb 8y ago
  That seems like a shocking lapse in planning when installing very expensive solar arrays. Can you point to an example? Does this happen frequently enough that there’s nearly always somewhere to run a miner?
  - denimnerd 8y ago
    They have a huge transmission line across Texas for Wind Power. I’ve heard sometimes electricity prices go negative at night due to excess wind power. There are actually tons of free nights electricity plans to match.
    - 21 8y ago
      So people should buy batteries, charge them at night and use them during the day. Over time, they should recoup the cost. Of course, this will arbitrage the discrepancy away.
      - Filligree 8y ago
        What will actually happen is the power producers buying what are, effectively, space heaters. You can never rely on negative power prices sticking around.
        zaarn 8y ago
        Negative prices will usually result in the produce shutting down the wind generators (any modern generator has a coupling at minimum) Shutting of generation is already part of the grid as you need to do that when the grid becomes underloaded.
Lazare 8y ago
> I missed the part where this was ever a good project. Agreed. > Cryptocurrency mining has to use the cheapest available power Mostly agreed. > A big problem with successful ICOs is that the companies immediately have too many shareholders to let them pivot. An ICO doesn't give you shareholders. Some ICOs outright call the money you give them "contributions" or "donations". (Tezos, who had a very successful coin offering and then hit somewhat similar challenges as this lot was very explicit: "Any contribution made to TEZOS during the Contribution Period as described below is qualified as a non-refundable donation...") But even the ones who label the money as an investment aren't giving out anything remotely resembling ownership, control, or voting rights to the purchasers. I don't see any reason why a pivot wouldn't be possible. And, cynically, a lot of ICOs do pivot almost immediately, from "building the product they promised" to "spending the money they raised". :) > not with 100s of retail shareholders demanding progress They can "demand" all they like, but what can they do? They have no ownership, no control, and no votes. The company is apparently owned by one Matthias Woestmann; as the article notes, he doesn't even have to listen to the founders. He certainly doesn't need to listen to the people who participated in the ICO.
- perl4ever 8y ago
  I found the term "contributions" odd, and when Googling it, found the following, which seems to be the epitome of the sort of ICO you describe, the "Useless Ethereum Token": https://uetoken.com/ https://uetoken.com/
  - wernsey 8y ago
    Sheesh, and even that had a spike in price and volume at the start of the year
- siruncledrew 8y ago
  Agree to all of those points. The part where any "investors" essentially have no say, control, or equity in the company would certainly defy any possible reason for a sentient angel or corporate investor to make an investment. There's an abundance of red flags that people need to seriously look at. Other gems from the article: > “I know most of the I.C.O.s out there are either fraud or won’t deliver on their promises,” he said. Envion, he believed, was different. Uhh... > Seif Shieshakly, an adviser to Envion who is based in the United Arab Emirates, said that the I.C.O. structure had “cut out so many middlemen” and created new investment opportunities, but that “the lack of regulations, again because of the infancy of I.C.O.s, carries risks that regulated environments would generally have far less of.” This one again speaks for itself. > The investors have also turned up evidence that some of the founders sold their own tokens before the current mess spilled into the public. Wow... so I guess with a lack of regulation, insider trading is suddenly cool again. > But he said the funds added up to only $50 million at this point, not the $100 million that the founders had claimed. Mr. Woestmann said the founders hadn’t raised as much money as they claimed. And the declining price of virtual currencies has dropped the value of the various digital tokens Envion is holding. So they not only willingly defrauded investors, but also basically used the money like a bank instead of a company, and just purchased other crypto assets to trade and earn from. > Jessica Smith, a 21-year-old in England, said she had put $28,000 into Envion — almost all of the money she had made over the last two years of trading cryptocurrencies nearly full time. She said she was now looking for new work. That's a very painful lesson about putting all your eggs in one basket, but one she will probably learn from.
nonbel 8y ago
>"Cryptocurrency mining has to use the cheapest available power, or else it loses money because the mining rewards float at just above the cost of the world's cheapest power." How much energy is being wasted each year due to power plant and grid inefficiencies?
duxup 8y ago
"A big problem with successful ICOs is that the companies immediately have too many shareholders to let them pivot. " I don't quite understand. What could you pivot .... to? You were either going to the ICO... or what could you possibly be geared to do? I know ICOs are all "techy" but outside that I don't see any reason someone offering an ICO would be good at anything else but that. It seems like a one shot business ... it either happens or it doesn't.
- Lazare 8y ago
  I think what's being suggested is that if you launch an ICO to "build an amphibious sheep ranch" or whatever, and raise $100m, and then it turns out that no such sheep exist, you don't have to just shrug, go "oh well", and spend the $100m on Lamborghini's. You could pivot and do something else. Here the company had an ICO to raise funds to build mobile crypto-mining rigs to move to where green energy was cheapest; if that's not viable, maybe they could build mobile crypto-mining rigs to move to where non-green energy is cheapest. Or maybe get into the green energy business directly. Or, I dunno, start making cooking shows, why not? > What could you pivot .... to? The suggestion isn't that they should pivot from "doing an ICO" as their business plan; that wasn't (meant to be) the business plan. The suggestion is that now that they've done the ICO, maybe they can pivot from their original business plan to something viable. ...or they can just spend the next few years suing each other and spending the money. That works too.
  - duxup 8y ago
    Interesting. When I think of a pivot I just sort of assume there is some core competency there that could be used in another way. Someone wants to start a hip blogging site, that doesn't work, well some other web service.... after all they've got people who kinda know that, and it's not that far off.. Just going from "we're gonna mine a bunch of coins" to, I just can't imagine how much capability you have to do anything else. Granted you don't have to pivot to something close, but man your odds of success have to drop pretty quick the farther you get from what you were built for. Even big successful companies fail at trying new things all the time, because nobody there gets it. Cisco's hilarious dip into consumer tech for a while with flip video, their hyper expensive video conferencing stuff is my favorite example.

by tlb 8y ago

Havoc 8y ago

If you need to pivot an ICO then it's already game over I reckon.

lawnchair_larry 8y ago
This can be shortened to "If you ICO then it's already game over" ICO anything is a really strong signal that nothing good can come of whatever you are reading.

to_bpr 8y ago

>have too many shareholders to let them pivot Token purchasers in ICOs aren't shareholders. >100s of retail shareholders demanding progress on the idea they originally backed. They have no guarantee or protections when buying into an ICO. They may try to pivot and get some disgruntled worthless-token-holders as a result, but if crypto has shown anything it's that even outright scams will maintain an unfortunately strong community of supporters.

tlb 8y ago
OK, "stakeholders". Can you point to an example of a company successfully pivoting after an ICO?
- CPLX 8y ago
  I've seen a few pivot from "what they said they were going to do" to "we just took all your money thx".
- celticninja 8y ago
  This is similar to how people raising money on crowdfunding sites decide to change/improve the product after beating their targets. This also results in failure usually because they don't deliver the original product and don't really know what they are doing except trying to spend the money they have raised.
- hapnin 8y ago
  Binance did an ICO last year. They made more money than Deutsche Bank did. But they're the exception in the scamsphere of Ethereum tokens.

mrb 8y ago

«renewable power will always be at a premium over the cheapest power.» That's patently false. The share of global electricity that's going into crypto mining is small enough—less than 0.5%—that it's too small to directly affect the price of renewables. In fact some mining ventures are even starting to build their own private power plants (one example: https://news.bitcoin.com/20mw-solar-farm-set-to-power-crypto-mining-in-rural-australia/ https://news.bitcoin.com/20mw-solar-farm-set-to-power-crypto...) There is no reason why this would increase the cost of renewables. More money, more R&D, more infrastructure deployments will in fact in the long term push prices downward for the rest of us (economies of scale):

jacobush 8y ago
Is it only me who considers 0.5% to be shockingly large for doing so little? (Not counting future relevance of crypto coins.)
- mrb 8y ago
  Why do you think cryptocurrencies do "so little"?

skybrian 8y ago

If electricity were easily stored and transported, you might have a case that renewable power is always more expensive. But renewable power is sometimes generated in inconvenient places or times. For example, the power lines needed might not be built yet, or it might be using the wind blowing at night. Sometimes crypto mining is in the best position to take advantage of that.

tlb 8y ago
That seems like a shocking lapse in planning when installing very expensive solar arrays. Can you point to an example? Does this happen frequently enough that there’s nearly always somewhere to run a miner?
- denimnerd 8y ago
  They have a huge transmission line across Texas for Wind Power. I’ve heard sometimes electricity prices go negative at night due to excess wind power. There are actually tons of free nights electricity plans to match.
  - 21 8y ago
    So people should buy batteries, charge them at night and use them during the day. Over time, they should recoup the cost. Of course, this will arbitrage the discrepancy away.
    - Filligree 8y ago
      What will actually happen is the power producers buying what are, effectively, space heaters. You can never rely on negative power prices sticking around.
      - zaarn 8y ago
        Negative prices will usually result in the produce shutting down the wind generators (any modern generator has a coupling at minimum) Shutting of generation is already part of the grid as you need to do that when the grid becomes underloaded.

Lazare 8y ago

> I missed the part where this was ever a good project. Agreed. > Cryptocurrency mining has to use the cheapest available power Mostly agreed. > A big problem with successful ICOs is that the companies immediately have too many shareholders to let them pivot. An ICO doesn't give you shareholders. Some ICOs outright call the money you give them "contributions" or "donations". (Tezos, who had a very successful coin offering and then hit somewhat similar challenges as this lot was very explicit: "Any contribution made to TEZOS during the Contribution Period as described below is qualified as a non-refundable donation...") But even the ones who label the money as an investment aren't giving out anything remotely resembling ownership, control, or voting rights to the purchasers. I don't see any reason why a pivot wouldn't be possible. And, cynically, a lot of ICOs do pivot almost immediately, from "building the product they promised" to "spending the money they raised". :) > not with 100s of retail shareholders demanding progress They can "demand" all they like, but what can they do? They have no ownership, no control, and no votes. The company is apparently owned by one Matthias Woestmann; as the article notes, he doesn't even have to listen to the founders. He certainly doesn't need to listen to the people who participated in the ICO.

perl4ever 8y ago
I found the term "contributions" odd, and when Googling it, found the following, which seems to be the epitome of the sort of ICO you describe, the "Useless Ethereum Token": https://uetoken.com/ https://uetoken.com/
- wernsey 8y ago
  Sheesh, and even that had a spike in price and volume at the start of the year
siruncledrew 8y ago
Agree to all of those points. The part where any "investors" essentially have no say, control, or equity in the company would certainly defy any possible reason for a sentient angel or corporate investor to make an investment. There's an abundance of red flags that people need to seriously look at. Other gems from the article: > “I know most of the I.C.O.s out there are either fraud or won’t deliver on their promises,” he said. Envion, he believed, was different. Uhh... > Seif Shieshakly, an adviser to Envion who is based in the United Arab Emirates, said that the I.C.O. structure had “cut out so many middlemen” and created new investment opportunities, but that “the lack of regulations, again because of the infancy of I.C.O.s, carries risks that regulated environments would generally have far less of.” This one again speaks for itself. > The investors have also turned up evidence that some of the founders sold their own tokens before the current mess spilled into the public. Wow... so I guess with a lack of regulation, insider trading is suddenly cool again. > But he said the funds added up to only $50 million at this point, not the $100 million that the founders had claimed. Mr. Woestmann said the founders hadn’t raised as much money as they claimed. And the declining price of virtual currencies has dropped the value of the various digital tokens Envion is holding. So they not only willingly defrauded investors, but also basically used the money like a bank instead of a company, and just purchased other crypto assets to trade and earn from. > Jessica Smith, a 21-year-old in England, said she had put $28,000 into Envion — almost all of the money she had made over the last two years of trading cryptocurrencies nearly full time. She said she was now looking for new work. That's a very painful lesson about putting all your eggs in one basket, but one she will probably learn from.

nonbel 8y ago

>"Cryptocurrency mining has to use the cheapest available power, or else it loses money because the mining rewards float at just above the cost of the world's cheapest power." How much energy is being wasted each year due to power plant and grid inefficiencies?

duxup 8y ago

"A big problem with successful ICOs is that the companies immediately have too many shareholders to let them pivot. " I don't quite understand. What could you pivot .... to? You were either going to the ICO... or what could you possibly be geared to do? I know ICOs are all "techy" but outside that I don't see any reason someone offering an ICO would be good at anything else but that. It seems like a one shot business ... it either happens or it doesn't.

Lazare 8y ago
I think what's being suggested is that if you launch an ICO to "build an amphibious sheep ranch" or whatever, and raise $100m, and then it turns out that no such sheep exist, you don't have to just shrug, go "oh well", and spend the $100m on Lamborghini's. You could pivot and do something else. Here the company had an ICO to raise funds to build mobile crypto-mining rigs to move to where green energy was cheapest; if that's not viable, maybe they could build mobile crypto-mining rigs to move to where non-green energy is cheapest. Or maybe get into the green energy business directly. Or, I dunno, start making cooking shows, why not? > What could you pivot .... to? The suggestion isn't that they should pivot from "doing an ICO" as their business plan; that wasn't (meant to be) the business plan. The suggestion is that now that they've done the ICO, maybe they can pivot from their original business plan to something viable. ...or they can just spend the next few years suing each other and spending the money. That works too.
- duxup 8y ago
  Interesting. When I think of a pivot I just sort of assume there is some core competency there that could be used in another way. Someone wants to start a hip blogging site, that doesn't work, well some other web service.... after all they've got people who kinda know that, and it's not that far off.. Just going from "we're gonna mine a bunch of coins" to, I just can't imagine how much capability you have to do anything else. Granted you don't have to pivot to something close, but man your odds of success have to drop pretty quick the farther you get from what you were built for. Even big successful companies fail at trying new things all the time, because nobody there gets it. Cisco's hilarious dip into consumer tech for a while with flip video, their hyper expensive video conferencing stuff is my favorite example.