6 ms·

Despite Bitcoin’s Dive, a Former Soviet Republic Is Still Betting Big on It

54 points by cyanbane 8y ago

kuhhk 8y ago
> Georgia provided land and cheap electricity so Bitfury, an American company, could set up a Bitcoin mining center in Tbilisi. I hope they realize the digital currency doesn't necessarily "stay" in Georgia. Either way, the prime minister provided a loan out of his own investment fund, and it's been paid back. Not sure they are betting big on crypto, but they are using 10% of their electricity for it...
- DoctorOetker 8y ago
  >The governing Georgian Dream party sold 45 acres for $1 for Bitfury to set up shop. yes this looks like textbook corruption: the government just "gives" land and energy to cryptocurrenncy mining operations? seems very probably that not the government but those in government who set it up are getting crypto bribes in return...
  - SlowRobotAhead 8y ago
    Happened all over the US last year. Lots of cities around me gave tax breaks and land to bring in “hundreds of tech jobs”... what we actually got was 12 jobs and jet engines cooling the servers stuffed in old buildings to the locals annoyance. There was money to be made in crypto. But not by buying coin low and selling high.
    - DoctorOetker 8y ago
      wow, I didn't know this was happening in US as well, are there any articles on the subject you can recommend?
      - bardam 8y ago
        See this N.Y. Times article focusing on Plattsburgh, NY: https://www.nytimes.com/2018/09/19/nyregion/bitcoin-mining-new-york-electricity.html https://www.nytimes.com/2018/09/19/nyregion/bitcoin-mining-n...
        DoctorOetker 8y ago
        thats sad on so many levels of course, but least comprehensible at all is: >With electricity so cheap that most residents use it to heat their homes, the city’s consumption exceeded its allocation on several days, Mr. Read explained. As a result, the Municipal Lighting Department had to purchase additional power at much higher prices — a cost it spread across its customers. The machines are generating heat (and cryptocurrency) from electricity the locals were using to generate heat... At least they could have co-located the machines with the locals in a way that heat can be exchanged with inside and outside, and a meter measuring energy consumption when heat is directed inside... The least wasteful form of mining is by replacing electric heaters with mining rigs, but that's not what happened here, it's more like going to the library to fetch some books because you ran out of toilet paper... thanks for sharing the article there's lots of similarities in this article with the Georgia one: besides the local economic depression, in both articles they also mention the local prison and the local casino...
        DoctorOetker 8y ago
        it's really a shame they're not even trying to be creative: for example why not use the heat to pasteurize milk? co-locate the miners with the pasteurization plants even better: desalinate water to steam, use the steam to heat the milk and the milk to cool the steam, now you have desalinated water AND pasteurized milk... but oh no, that would actually create a job for a couple of people to work it out and change the plants and negotiate and discover similar opportunities...
      - celticninja 8y ago
        I remember an article where one local government, where power costs were very cheap, had to ban new bitcoin mining farms because they power draw was huge and the benefits gained by having them as an employer in the area were so small.
sauliusm 8y ago
Nice touch on referring to Georgia as a "former Soviet Republic". The article must have then described Bitfury as a company from a former British colony :)
- kuhhk 8y ago
  Might have been the editors hoping that Georgia wouldn't be confused with the US state. Perhaps it was a bit more clear? Though it did force me to open the article..
  - gsich 8y ago
    Georgia (Europe) or (Asia) or (Eurasia) would be too hard indeed.
- MarsAscendant 8y ago
  Referring to Georgia as a "former Soviet Republic" is similar in tone to calling Ukraine "a historic part of Russia". There were both what they've been called, sure, but given the current state of relationship between Russia and any of the two countries, it's like looking for trouble. EDIT: what?
  - lawlessone 8y ago
    we don't usually call Iraq the former Mesopotamian Kingdom
    - MarsAscendant 8y ago
      I was referring to the anti-Russian sentiment brewing in both countries. Russia has, after all, engaged in a military conflict with Georgia on behalf of South Ossetia in 2008. The two countries have been enemies since some time before that, and remain in hostility towards each other. The big difference, of course, is that Mesopotamia is unlikely to commit crimes on foreign soil any time soon because you dismiss its territorial ambitions... unless I'm missing something everyone else gets here.
  - 8y ago
PhasmaFelis 8y ago
Is Bitcoin diving again? I can never keep track.
- bdcravens 8y ago
  Well, you know it's not shooting up, as HN isn't currently swarming with the Bitcoin zealots from Reddit.
  - Kiro 8y ago
    Never seen a single positive word about Bitcoin on Hacker News, even when price was at its peak, so if it's true what you say they must have been doing a pretty bad job.
    - celticninja 8y ago
      Never is a very bold statement. However price spikes do tend to be met with negativity if they are discussed at all. A price spike is of no technological value so HN doesn't really worry about them (unlike say Reddit where it is the overwhelming topic).
    - bdcravens 8y ago
      I've seen a lot of it. I can recognize it from a mile away, as I spend a lot of time on various crypto subreddits. (I was mining in 2011; I'm active there, under a different username with a different voice) Personally I think there's nothing wrong with what passes for typical discussion there: high optimism, but low substance. It just has no place on HN, and is downvoted accordingly. That's not a conspiracy against Bitcoin as much as a community standard here for what makes for substantive discussion.
- username223 8y ago
  No, it has been meandering around $3600 for a month or so (around the average electricity cost to mine one[1]). To put that in perspective, at that price the total value of all bitcoins that will ever exist is about $75 billion. That's close to the total value of Swiss Francs or Mexican Pesos in circulation[2], which still seems insane to me given that you probably can't even use it to buy lunch. [1] https://www.marketwatch.com/story/heres-how-much-it-costs-to-mine-a-single-bitcoin-in-your-country-2018-03-06 https://www.marketwatch.com/story/heres-how-much-it-costs-to... [2] https://en.wikipedia.org/wiki/Circulation_%28currency%29 https://en.wikipedia.org/wiki/Circulation_%28currency%29
granaldo 8y ago
Dived since the last year, but price has been stagnant within 3000 - 4000 range for the few couple of months
- simias 8y ago
  The last big dive from ~6500 occurred mid-November. That might be old news by cryptocurrency standards but 2 months isn't a whole lot of time.
  - wolco 8y ago
    Big money is now involved so expect the next climb to happen quickly and the next crash to be in quickier.
lightedman 8y ago
I bet big on BC being stuck in the 3K range up until yesterday. My bet paid off wonderfully.
wscott 8y ago
I clicked on the link thinking. "Oh, some country is using Bitcoin as a reserve currency. That could be interesting." But no. Georgia is allowing an American company mine Bitcoin at scale. It uses a lot of power and a lot of infrastructure. But isn't a huge bet or anything interesting.
- cal5k 8y ago
  I'd love to see a government experiment with having its central bank issue a dollar-backed stablecoin. I mean, fundamentally the issue is that the rise in digital payments puts most of the money supply in bank ledgers... if the money supply was on a public ledger, individuals could still deposit it with a bank, but they could also send it peer-to-peer if they so chose.
  - sidko 8y ago
    The loss of privacy in this case may not be worth using a public ledger. In general though, I think it would be an interesting experiment if individuals can hold central bank money directly instead of going through commercial banks.
    - cal5k 8y ago
      I think there are plenty of ways that privacy could be regained... layer 1 settlements, use of an anonymous protocol like MimbleWimble, etc. It wouldn't necessarily need to be Bitcoin as it's implemented today. But I agree... that experiment would be quite fascinating. It might not even be that big of a change... most people would probably continue to entrust a bank with their funds, and banks could potentially continue to operate a fractional reserve system.
  - lawlessone 8y ago
    >having its central bank issue a dollar-backed stablecoin. Why not just issue dollars?
    - cal5k 8y ago
Mengkudulangsat 8y ago
Without knowing the absolute production capacity and utilization pre-Bitcoin / post-Bitcoin; that 10% isn't a very useful metric. If Bitcoin is using locally underutilized electricity, I don't see anything wrong with this adventure.
quantumwoke 8y ago
I have some friends who started working on interesting projects in the crypto space after Bitcoin 'died'. It seems to me there is still some potential for innovation in this area, as evidenced by the market sizing. Just need to cut some of the ICO/marketing cruft away and be realistic about its usecases.

54 points by cyanbane 8y ago

> Georgia provided land and cheap electricity so Bitfury, an American company, could set up a Bitcoin mining center in Tbilisi. I hope they realize the digital currency doesn't necessarily "stay" in Georgia. Either way, the prime minister provided a loan out of his own investment fund, and it's been paid back. Not sure they are betting big on crypto, but they are using 10% of their electricity for it...

DoctorOetker 8y ago
>The governing Georgian Dream party sold 45 acres for $1 for Bitfury to set up shop. yes this looks like textbook corruption: the government just "gives" land and energy to cryptocurrenncy mining operations? seems very probably that not the government but those in government who set it up are getting crypto bribes in return...
- SlowRobotAhead 8y ago
  Happened all over the US last year. Lots of cities around me gave tax breaks and land to bring in “hundreds of tech jobs”... what we actually got was 12 jobs and jet engines cooling the servers stuffed in old buildings to the locals annoyance. There was money to be made in crypto. But not by buying coin low and selling high.
  - DoctorOetker 8y ago
    wow, I didn't know this was happening in US as well, are there any articles on the subject you can recommend?
    - bardam 8y ago
      See this N.Y. Times article focusing on Plattsburgh, NY: https://www.nytimes.com/2018/09/19/nyregion/bitcoin-mining-new-york-electricity.html https://www.nytimes.com/2018/09/19/nyregion/bitcoin-mining-n...
      - DoctorOetker 8y ago
        thats sad on so many levels of course, but least comprehensible at all is: >With electricity so cheap that most residents use it to heat their homes, the city’s consumption exceeded its allocation on several days, Mr. Read explained. As a result, the Municipal Lighting Department had to purchase additional power at much higher prices — a cost it spread across its customers. The machines are generating heat (and cryptocurrency) from electricity the locals were using to generate heat... At least they could have co-located the machines with the locals in a way that heat can be exchanged with inside and outside, and a meter measuring energy consumption when heat is directed inside... The least wasteful form of mining is by replacing electric heaters with mining rigs, but that's not what happened here, it's more like going to the library to fetch some books because you ran out of toilet paper... thanks for sharing the article there's lots of similarities in this article with the Georgia one: besides the local economic depression, in both articles they also mention the local prison and the local casino...
        DoctorOetker 8y ago
        it's really a shame they're not even trying to be creative: for example why not use the heat to pasteurize milk? co-locate the miners with the pasteurization plants even better: desalinate water to steam, use the steam to heat the milk and the milk to cool the steam, now you have desalinated water AND pasteurized milk... but oh no, that would actually create a job for a couple of people to work it out and change the plants and negotiate and discover similar opportunities...
    - celticninja 8y ago
      I remember an article where one local government, where power costs were very cheap, had to ban new bitcoin mining farms because they power draw was huge and the benefits gained by having them as an employer in the area were so small.

sauliusm 8y ago

Nice touch on referring to Georgia as a "former Soviet Republic". The article must have then described Bitfury as a company from a former British colony :)

kuhhk 8y ago
Might have been the editors hoping that Georgia wouldn't be confused with the US state. Perhaps it was a bit more clear? Though it did force me to open the article..
- gsich 8y ago
  Georgia (Europe) or (Asia) or (Eurasia) would be too hard indeed.
MarsAscendant 8y ago
Referring to Georgia as a "former Soviet Republic" is similar in tone to calling Ukraine "a historic part of Russia". There were both what they've been called, sure, but given the current state of relationship between Russia and any of the two countries, it's like looking for trouble. EDIT: what?
- lawlessone 8y ago
  we don't usually call Iraq the former Mesopotamian Kingdom
  - MarsAscendant 8y ago
    I was referring to the anti-Russian sentiment brewing in both countries. Russia has, after all, engaged in a military conflict with Georgia on behalf of South Ossetia in 2008. The two countries have been enemies since some time before that, and remain in hostility towards each other. The big difference, of course, is that Mesopotamia is unlikely to commit crimes on foreign soil any time soon because you dismiss its territorial ambitions... unless I'm missing something everyone else gets here.
- 8y ago

PhasmaFelis 8y ago

Is Bitcoin diving again? I can never keep track.

bdcravens 8y ago
Well, you know it's not shooting up, as HN isn't currently swarming with the Bitcoin zealots from Reddit.
- Kiro 8y ago
  Never seen a single positive word about Bitcoin on Hacker News, even when price was at its peak, so if it's true what you say they must have been doing a pretty bad job.
  - celticninja 8y ago
    Never is a very bold statement. However price spikes do tend to be met with negativity if they are discussed at all. A price spike is of no technological value so HN doesn't really worry about them (unlike say Reddit where it is the overwhelming topic).
  - bdcravens 8y ago
    I've seen a lot of it. I can recognize it from a mile away, as I spend a lot of time on various crypto subreddits. (I was mining in 2011; I'm active there, under a different username with a different voice) Personally I think there's nothing wrong with what passes for typical discussion there: high optimism, but low substance. It just has no place on HN, and is downvoted accordingly. That's not a conspiracy against Bitcoin as much as a community standard here for what makes for substantive discussion.
username223 8y ago
No, it has been meandering around $3600 for a month or so (around the average electricity cost to mine one[1]). To put that in perspective, at that price the total value of all bitcoins that will ever exist is about $75 billion. That's close to the total value of Swiss Francs or Mexican Pesos in circulation[2], which still seems insane to me given that you probably can't even use it to buy lunch. [1] https://www.marketwatch.com/story/heres-how-much-it-costs-to-mine-a-single-bitcoin-in-your-country-2018-03-06 https://www.marketwatch.com/story/heres-how-much-it-costs-to... [2] https://en.wikipedia.org/wiki/Circulation_%28currency%29 https://en.wikipedia.org/wiki/Circulation_%28currency%29

granaldo 8y ago

Dived since the last year, but price has been stagnant within 3000 - 4000 range for the few couple of months

simias 8y ago
The last big dive from ~6500 occurred mid-November. That might be old news by cryptocurrency standards but 2 months isn't a whole lot of time.
- wolco 8y ago
  Big money is now involved so expect the next climb to happen quickly and the next crash to be in quickier.

lightedman 8y ago

I bet big on BC being stuck in the 3K range up until yesterday. My bet paid off wonderfully.

wscott 8y ago

I clicked on the link thinking. "Oh, some country is using Bitcoin as a reserve currency. That could be interesting." But no. Georgia is allowing an American company mine Bitcoin at scale. It uses a lot of power and a lot of infrastructure. But isn't a huge bet or anything interesting.

cal5k 8y ago
I'd love to see a government experiment with having its central bank issue a dollar-backed stablecoin. I mean, fundamentally the issue is that the rise in digital payments puts most of the money supply in bank ledgers... if the money supply was on a public ledger, individuals could still deposit it with a bank, but they could also send it peer-to-peer if they so chose.
- sidko 8y ago
  The loss of privacy in this case may not be worth using a public ledger. In general though, I think it would be an interesting experiment if individuals can hold central bank money directly instead of going through commercial banks.
  - cal5k 8y ago
    I think there are plenty of ways that privacy could be regained... layer 1 settlements, use of an anonymous protocol like MimbleWimble, etc. It wouldn't necessarily need to be Bitcoin as it's implemented today. But I agree... that experiment would be quite fascinating. It might not even be that big of a change... most people would probably continue to entrust a bank with their funds, and banks could potentially continue to operate a fractional reserve system.
- lawlessone 8y ago
  >having its central bank issue a dollar-backed stablecoin. Why not just issue dollars?
  - cal5k 8y ago

Mengkudulangsat 8y ago

Without knowing the absolute production capacity and utilization pre-Bitcoin / post-Bitcoin; that 10% isn't a very useful metric. If Bitcoin is using locally underutilized electricity, I don't see anything wrong with this adventure.

quantumwoke 8y ago

I have some friends who started working on interesting projects in the crypto space after Bitcoin 'died'. It seems to me there is still some potential for innovation in this area, as evidenced by the market sizing. Just need to cut some of the ICO/marketing cruft away and be realistic about its usecases.