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I was following along until this bit which seems to hold up the entire argument: > [BTC mining] is often done using electricity which is effectively stolen fro

I was following along until this bit which seems to hold up the entire argument: > [BTC mining] is often done using electricity which is effectively stolen from taxpayers with the help of government officials Can somebody elaborate on the stolen/corruption angle?

deleted 6y ago
[deleted]
rtkwe 6y ago
Not 100% sure but there was some news a few years back about miners setting up shop in towns which had really low energy costs because they bought a fixed block of power from a nearby source and thus it was super cheap... as long as they didn't have to go over that initial purchase, after that it became more expensive than normal for everyone.
- brianobush 6y ago
  This was done in the state of Washington (Wenatchee area) due to cheap electricity from dams.
xt00 6y ago
I think he's exaggerating here, but there are definitely examples where people especially in China have setup huge operations with the help of local officials who give them sweetheart deals on the electricity prices -- seems likely that the officials helping this happen may get some sort of benefit from this arrangement, but not sure if that has actually been reported or just assumed. In Washington state there were a number of bitcoin operations that started in areas with low cost power that promised to bring jobs to the area and my understanding was that the local power company often did upgrades to lines and substations to accommodate the added power needs -- the local taxpayers definitely would either pay for that capital cost or pay the additional maintenance costs down the road.
paulryanrogers 6y ago
https://news.bitcoin.com/chinese-kennel-owner-caught-stealing-electricity-to-power-underground-bitcoin-mining-farm/ https://news.bitcoin.com/chinese-kennel-owner-caught-stealin... https://news.bitcoin.com/bulgarian-electricity-company-unveils-details-of-historic-power-theft-illegal-bitcoin-mining/ https://news.bitcoin.com/bulgarian-electricity-company-unvei... https://www.coindesk.com/illegal-miners-in-russia-stole-6-6m-worth-of-electricity-power-grid-firm-says https://www.coindesk.com/illegal-miners-in-russia-stole-6-6m...
rtlfe 6y ago
> Can somebody elaborate on the stolen/corruption angle? It's easy to find articles about stolen electricity [1][2], but since these are both about people who were arrested it seems the governments weren't helping them. [1] https://phys.org/news/2019-07-china-police-bitcoin-miners-mn.html https://phys.org/news/2019-07-china-police-bitcoin-miners-mn... [2] https://news.bitcoin.com/bulgarian-electricity-company-unveils-details-of-historic-power-theft-illegal-bitcoin-mining/ https://news.bitcoin.com/bulgarian-electricity-company-unvei...
loeg 6y ago
I mean: https://www.google.com/search?q=bitcoin+mining+using+stolen+electricity https://www.google.com/search?q=bitcoin+mining+using+stolen+... The first four links for me are: * 13 arrested for stealing $3million of electricity to mine BTC (China) * Illegal Crypto Miner Caught After Stealing More Than $400k [in electricity] (Russia) * Bulgarian Electricity Company Unveils Details of Historic Power Theft [it's Bitcoin miners] * Bitcoin mining operators steal $1.5 million in electricity (Australia) These are just the ones who've been caught so far.
- ryanianian 6y ago
  Those articles point out that the governments stopped it rather than enabling it for considerable periods of time. You probably have to pay off a police officer when you're climbing the tower, but I don't see any cases where corruption at wide scale was involved. The articles point out the value of the electricity stolen but not the gained profit. E.g., what percentage of BTC was mined with stolen electricity based on the cases we've found so far? If only a vanishingly small amount of BTC was mined with stolen electricity then the rest of the argument kind of falls apart.
  - loeg 6y ago
    > ... rather than enabling it for considerable periods of time. The $3 million example from China was operational for over 2 years. > The articles point out the value of the electricity stolen but not the gained profit. Sure. Random internet source says average Chinese industrial electricity is $0.084/kWh. So that's approx. 36 million kWh total, or average 1.4 million kWh/month (1.4 GWh/mo) during their operation. > E.g., what percentage of BTC was mined with stolen electricity based on the cases we've found so far? https://digiconomist.net/bitcoin-energy-consumption/ https://digiconomist.net/bitcoin-energy-consumption/ for Mar 2017 through May 2019 estimates global BTC energy consumption at 10 TWh/yr (830 GWh/mo) minimum to 73 TWh/yr (6,100 GWh/mo) maximum. Absolute lower bounds are 3.4 TWh/yr-60TWh/yr (280-5000 GWh/mo). So, making some hand-wavy assumptions that they did not scale their operation over time, or reduce mining if prices fell, and that their ASICs were approximately as good as everyone else's, they were anywhere from 0.2%-0.5% (early 2017) to 0.02-0.03% (2018 peak) of global BTC energy consumption. Per https://www.blockchain.com/charts/total-bitcoins https://www.blockchain.com/charts/total-bitcoins the number of BTC in circulation rose from 16.193M to 17.728M (= ~1.535M) coins during that time. Just as rough bounds, 0.02% would be 307 coins and 0.5% would be 7675 coins. https://www.coindesk.com/price/bitcoin https://www.coindesk.com/price/bitcoin price in Mar 2017 was ~$1200 USD, peaking in 2018 at $19,000, and $8,700 in May 2019. I don't have a weighted average for that period, but I'd approximate the average price over the period as roughly $5k. So: our extreme low estimate of 307 coins, sold immediately on mining, yields revenue of $1.5 million (on $3mil stolen electricity). On the high end, $38 million in revenue. Probably they made something in between. > If only a vanishingly small amount of BTC was mined with stolen electricity That is just the one operation, which got caught. It doesn't include any other illegal operations which got caught, and it does not include illegal operations which have not been caught. 0.5% is small, but significant. 0.02% is maybe less so. This estimate of percent-BTC-produced-with-unpaid-electricity doesn't include legal operations that went bankrupt and will not be able to pay what they owe to the local utility. (There was a lot of this after the 2018 boom-crash.) > then the rest of the argument kind of falls apart. I don't really agree. The incentives here are all terrible and will encourage more of this going forward, especially with BTC prices astronomical again. (1) Burn as much electricity as possible. This is just bad for society and the world. (2) Acquire electricity as cheaply as possible. In the absence of theft, this encourages consuming electricity in locales that do not price carbon production externalities into electricity costs. Obviously, theft makes electricity even less expensive. (3) Maaaybe you can take your stolen profits and run, because BTC is pseudonymous and freshly mined coins aren't connected to real world identities. This encourages illegal operations. Thanks for reading :-).
risho 6y ago
proof of work is an energy black hole. it goes to where energy is cheapest. this means that it has a tendency to go to places where subsidies exist and destroy said subsidy. if there is a place where electricity is being propped up by taxes or other such things for the benefit of the community, there is no reason for them to not just plug in a bunch of miners there and suck that subsidy dry.
jokethrowaway 6y ago
I think he's referring to miners stealing electricity in China

deleted 6y ago

[deleted]

rtkwe 6y ago

Not 100% sure but there was some news a few years back about miners setting up shop in towns which had really low energy costs because they bought a fixed block of power from a nearby source and thus it was super cheap... as long as they didn't have to go over that initial purchase, after that it became more expensive than normal for everyone.

brianobush 6y ago
This was done in the state of Washington (Wenatchee area) due to cheap electricity from dams.

xt00 6y ago

I think he's exaggerating here, but there are definitely examples where people especially in China have setup huge operations with the help of local officials who give them sweetheart deals on the electricity prices -- seems likely that the officials helping this happen may get some sort of benefit from this arrangement, but not sure if that has actually been reported or just assumed. In Washington state there were a number of bitcoin operations that started in areas with low cost power that promised to bring jobs to the area and my understanding was that the local power company often did upgrades to lines and substations to accommodate the added power needs -- the local taxpayers definitely would either pay for that capital cost or pay the additional maintenance costs down the road.

paulryanrogers 6y ago

https://news.bitcoin.com/chinese-kennel-owner-caught-stealing-electricity-to-power-underground-bitcoin-mining-farm/ https://news.bitcoin.com/chinese-kennel-owner-caught-stealin... https://news.bitcoin.com/bulgarian-electricity-company-unveils-details-of-historic-power-theft-illegal-bitcoin-mining/ https://news.bitcoin.com/bulgarian-electricity-company-unvei... https://www.coindesk.com/illegal-miners-in-russia-stole-6-6m-worth-of-electricity-power-grid-firm-says https://www.coindesk.com/illegal-miners-in-russia-stole-6-6m...

rtlfe 6y ago

> Can somebody elaborate on the stolen/corruption angle? It's easy to find articles about stolen electricity [1][2], but since these are both about people who were arrested it seems the governments weren't helping them. [1] https://phys.org/news/2019-07-china-police-bitcoin-miners-mn.html https://phys.org/news/2019-07-china-police-bitcoin-miners-mn... [2] https://news.bitcoin.com/bulgarian-electricity-company-unveils-details-of-historic-power-theft-illegal-bitcoin-mining/ https://news.bitcoin.com/bulgarian-electricity-company-unvei...

loeg 6y ago

I mean: https://www.google.com/search?q=bitcoin+mining+using+stolen+electricity https://www.google.com/search?q=bitcoin+mining+using+stolen+... The first four links for me are: * 13 arrested for stealing $3million of electricity to mine BTC (China) * Illegal Crypto Miner Caught After Stealing More Than $400k [in electricity] (Russia) * Bulgarian Electricity Company Unveils Details of Historic Power Theft [it's Bitcoin miners] * Bitcoin mining operators steal $1.5 million in electricity (Australia) These are just the ones who've been caught so far.

ryanianian 6y ago
Those articles point out that the governments stopped it rather than enabling it for considerable periods of time. You probably have to pay off a police officer when you're climbing the tower, but I don't see any cases where corruption at wide scale was involved. The articles point out the value of the electricity stolen but not the gained profit. E.g., what percentage of BTC was mined with stolen electricity based on the cases we've found so far? If only a vanishingly small amount of BTC was mined with stolen electricity then the rest of the argument kind of falls apart.
- loeg 6y ago
  > ... rather than enabling it for considerable periods of time. The $3 million example from China was operational for over 2 years. > The articles point out the value of the electricity stolen but not the gained profit. Sure. Random internet source says average Chinese industrial electricity is $0.084/kWh. So that's approx. 36 million kWh total, or average 1.4 million kWh/month (1.4 GWh/mo) during their operation. > E.g., what percentage of BTC was mined with stolen electricity based on the cases we've found so far? https://digiconomist.net/bitcoin-energy-consumption/ https://digiconomist.net/bitcoin-energy-consumption/ for Mar 2017 through May 2019 estimates global BTC energy consumption at 10 TWh/yr (830 GWh/mo) minimum to 73 TWh/yr (6,100 GWh/mo) maximum. Absolute lower bounds are 3.4 TWh/yr-60TWh/yr (280-5000 GWh/mo). So, making some hand-wavy assumptions that they did not scale their operation over time, or reduce mining if prices fell, and that their ASICs were approximately as good as everyone else's, they were anywhere from 0.2%-0.5% (early 2017) to 0.02-0.03% (2018 peak) of global BTC energy consumption. Per https://www.blockchain.com/charts/total-bitcoins https://www.blockchain.com/charts/total-bitcoins the number of BTC in circulation rose from 16.193M to 17.728M (= ~1.535M) coins during that time. Just as rough bounds, 0.02% would be 307 coins and 0.5% would be 7675 coins. https://www.coindesk.com/price/bitcoin https://www.coindesk.com/price/bitcoin price in Mar 2017 was ~$1200 USD, peaking in 2018 at $19,000, and $8,700 in May 2019. I don't have a weighted average for that period, but I'd approximate the average price over the period as roughly $5k. So: our extreme low estimate of 307 coins, sold immediately on mining, yields revenue of $1.5 million (on $3mil stolen electricity). On the high end, $38 million in revenue. Probably they made something in between. > If only a vanishingly small amount of BTC was mined with stolen electricity That is just the one operation, which got caught. It doesn't include any other illegal operations which got caught, and it does not include illegal operations which have not been caught. 0.5% is small, but significant. 0.02% is maybe less so. This estimate of percent-BTC-produced-with-unpaid-electricity doesn't include legal operations that went bankrupt and will not be able to pay what they owe to the local utility. (There was a lot of this after the 2018 boom-crash.) > then the rest of the argument kind of falls apart. I don't really agree. The incentives here are all terrible and will encourage more of this going forward, especially with BTC prices astronomical again. (1) Burn as much electricity as possible. This is just bad for society and the world. (2) Acquire electricity as cheaply as possible. In the absence of theft, this encourages consuming electricity in locales that do not price carbon production externalities into electricity costs. Obviously, theft makes electricity even less expensive. (3) Maaaybe you can take your stolen profits and run, because BTC is pseudonymous and freshly mined coins aren't connected to real world identities. This encourages illegal operations. Thanks for reading :-).

risho 6y ago

proof of work is an energy black hole. it goes to where energy is cheapest. this means that it has a tendency to go to places where subsidies exist and destroy said subsidy. if there is a place where electricity is being propped up by taxes or other such things for the benefit of the community, there is no reason for them to not just plug in a bunch of miners there and suck that subsidy dry.

jokethrowaway 6y ago

I think he's referring to miners stealing electricity in China