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I agree with a carbon tax in general but it misses the point when it comes to crypto. When it comes to domestic travel you can tax airlines directly; for manufa

by paulgb 6y ago

I agree with a carbon tax in general but it misses the point when it comes to crypto. When it comes to domestic travel you can tax airlines directly; for manufacture it’s harder but you can in theory tax at the border. For cryptos, which were designed to subvert government control, there is no way to tax them since mining can just move to somewhere with less environmental controls.

Taek 6y ago
That's not a problem unique to crypto, it's true of all manufacturing. And honestly I think the solution is to declare war (whether via sanctions, violence, or some other means) on regions that are refusing to be responsible with the global ecosystem. I think it's a mistake to single out crypto as a unique actor in this growing issue, and that we should look for solutions that will generalize across all industries. Because all industries are contributing to the modern ecological crisis. And I'll add, crypto does not care if energy becomes more scarce. What crypto cares about is that energy is equally scarce for attackers and defenders. If, due to regulation of production, the cost of energy goes up, crypto will use proportionally less energy and keep chugging away quite happily.
- andrepd 6y ago
  It's important to undersrand that the EU and the US account for ~25% of the world economy each. They could push reforms unilaterally if they so desired. They just don't, because it's convenient to their business interests.
- mhluongo 6y ago
  Well said, though jumping to violence so quickly is.. concerning. It does appear that there's a coordination / commons problem here that might not be easy to resolve without force
- paulgb 6y ago
  Again though, sanctions work for manufacturing but not for cryptocurrencies. Iran is sanctioned from banking from the US and EU but is still a major Bitcoin mining center.
  - phpnode 6y ago
    All it takes is for the US and EU to ban cryptocurrency itself and the problem goes away. It doesn't matter if mining is done in countries beyond their borders because the demand will go through the floor and those countries will have no incentive to keep wasting energy on it. The idea that cryptocurrency is beyond government control is fundamentally wrong. Most people don't want to be criminals.
    - paulgb 6y ago
      Yes, they could block the fiat pipes out instead of the crypto pipes in. Even if it wasn’t a perfect plug, it would devastate the prices and might cause the whole industry to unravel.
- lifty 6y ago
  I agree with you. And the irony is that the western wealthiest countries have the highest carbon footprint per capita. So the biggest impact would be made by changing our own lifestyles, but it's easier to rip on crypto art than give up your laundry dryer or SUV.
  - paulgb 6y ago
    It might make NFT fans feel better to imagine their detractors getting around in an SUV, but I think you’d find that a lot of us are anti-SUV (both aesthetically and in favor of different incentives around fuel consumption) as well.
    - lifty 6y ago
      Not an NFT fan but point taken. We need to go at this from all directions, but picking energy use cases one by one will make a mess of it. We need incentives at the base layers (energy production, fuels etc.)
- OskarS 6y ago
  The difference between manufacturing and crypto is that manufacturing actually, you know, manufactures stuff. It makes stuff that is useful to people. It contributes to human society. The energy consumed to power cryptocurrencies contributes nothing to society. It's literally destroying the environment in order to run as many SHA256 hashes as possible per second.
  - matheusmoreira 6y ago
    This problem is specific to proof of work systems. Alternative solutions are already being designed and implemented. Whether existing coins like bitcoin, ethereum and monero will implement these new systems is unknown. > The energy consumed to power cryptocurrencies contributes nothing to society. This is simply false. The energy spent guarantees the integrity of the decentralized ledgers that power cryptocurrencies. Perhaps there are better solutions out there but it's wrong to say that the energy consumption produces no value.
    - OskarS 6y ago
      Whether or not other systems are possible is not really relevant: cryptocurrencies as they exist today work like this. The fact that one day potentially we will have proof-of-stake doesn't change the fact that today we are destroying the earth for no reason at all.
      - matheusmoreira 6y ago
        Destroying the planet? Don't exaggerate. Even the submitted article has the following disclaimer: > Of course even these figures — and anything an individual does — are a drop in the ocean of global emissions (~50 billion tonnes CO2e). There are much higher priority targets for carbon footprint reduction. Eventually cryptocurrencies will use different less expensive algorithms and electricity generation and storage will be a lot friendlier to the environment.
    - danaris 6y ago
      > The energy spent guarantees the integrity of the decentralized ledgers that power cryptocurrencies. This is not of anywhere near sufficient value to society to justify the obscene amount of resources consumed for it. Personally, I would say that it, in fact, contributes nothing to society.
- tim333 6y ago
  Rather than declaring war which is impractical, you can work out a fine based on tons of CO2 or whatever and put it as a tariff on their exports.
mhluongo 6y ago
I've been avoiding this discussion on HN for months now because most of it appears to be in bad faith / wholly misinformed. But okay, I'll bite. > there is no way to tax them You put a heavy tax on power consumption. Done. > just move to somewhere with less environmental controls Crypto isn't the first industry to take advantage of tax arbitrage. By this logic, few businesses should run in the US.. and yet the only ones commonly taking advantage of havens and tax arb are larger orgs with the resources to structure. Business and money are fluid, but not that fluid.
- paulgb 6y ago
  > Business and money are fluid, but not that fluid. Manufacturing and moving physical goods is not fluid, but creating and transferring a fungible, pseudonymous asset is. It would be possible for a country to block or put a tariff on imported goods from a country that didn’t do enough to curb carbon emissions, but it wouldn’t be possible to block imports of crypto without overstepping.
- Retric 6y ago
  Miners outside the US are paid by US investment into crypto. It’s an externality with multiple solutions, but increasing the cost of electricity in the US does nothing.
- quickthrower2 6y ago
  How do you politically get the world to agree on a power consumption tax? I like the idea but it seems unlikely at a global level.
nivenkos 6y ago
Electricity prices?
pavlov 6y ago
Tax the outflows at crypto exchanges. The only reason anyone cares about this stuff is that you can sell it to the next sucker for real money. Make that unappealingly expensive, and the retail investors will go away.
- bhupy 6y ago
  That defeats part of the purpose of a carbon tax. In theory, having all crypto be on non-carbon energy is ecologically safe. A carbon tax applied at the level of energy purchase is the most reliable way to move even crypto energy consumption to renewables.
bhupy 6y ago
You can target the energy suppliers directly, who then pass the cost on to consumers of the electricity. With a sufficiently high tax, it becomes unprofitable to mine crypto using non-renewable energy. In theory, if the world had a high energy PoW blockchain solely powered by solar energy, that would be ecologically harmless.
- DrewRWx 6y ago
  Except that would generate the same sort of run on solar panels and/or their constituent components that is did for GPUS before ASICs got big. Solar panels that could otherwise be used to replace fossil fuels.
  - bhupy 6y ago
    > Except that would generate the same sort of run on solar panels and/or their constituent components that is did for GPUS before ASICs got big. Yes, and there's nothing inherently wrong with that, because supply isn't constrained. For any good (or service) for which there is sufficient supply elasticity, when demand increases prices increase temporarily, but that's then followed by an increase in supply to meet that demand. The inflation adjusted price of high-end GPUs has been basically flat since 2000 -> https://hexus.net/tech/news/graphics/103399-inflation-adjusted-price-history-high-end-nvidia-gpus-tabulated/ https://hexus.net/tech/news/graphics/103399-inflation-adjust.... Insofar as there has been variation, it has largely been due to other confounding variables. In other words, solar panels will be used to replace fossil fuels no matter what. As long as there's a carbon tax, all crypto mining does is stimulate the demand for solar panels. Right now, I stand to gain a lot of money by starting a solar panel manufacturing company (because of crypto), but the net result (fully developed solar panel supply chains) is still good for humanity no matter what. That only happens if we have targeted environmental policy that magnifies that incentive.
snarf21 6y ago
You don't stop crypto by taxing it. You stop it by banning it at the ISP level. It won't stop 100% of transactions but the price would crater for Bitcoin to $10 and that alone will kill it.
- gruez 6y ago
  Bitcoin runs over tor, you know.
  - snarf21 6y ago
    True, but what percentage of user who own on Coinbase are going to setup Tor to buy/sell Bitcoin? What percentage are going to be comfortable setting up a Trezor? I did say it wouldn't stop 100% of transactions. If a government bans it, the hedge funds are dumping their positions too. Bitcoin would go back to being a $5 crypto. To be clear, I'm not sure the US government is poised to do this. I was merely saying that you can't carbon tax it out of existence.

by paulgb 6y ago

Taek 6y ago

That's not a problem unique to crypto, it's true of all manufacturing. And honestly I think the solution is to declare war (whether via sanctions, violence, or some other means) on regions that are refusing to be responsible with the global ecosystem. I think it's a mistake to single out crypto as a unique actor in this growing issue, and that we should look for solutions that will generalize across all industries. Because all industries are contributing to the modern ecological crisis. And I'll add, crypto does not care if energy becomes more scarce. What crypto cares about is that energy is equally scarce for attackers and defenders. If, due to regulation of production, the cost of energy goes up, crypto will use proportionally less energy and keep chugging away quite happily.

andrepd 6y ago
It's important to undersrand that the EU and the US account for ~25% of the world economy each. They could push reforms unilaterally if they so desired. They just don't, because it's convenient to their business interests.
mhluongo 6y ago
Well said, though jumping to violence so quickly is.. concerning. It does appear that there's a coordination / commons problem here that might not be easy to resolve without force
paulgb 6y ago
Again though, sanctions work for manufacturing but not for cryptocurrencies. Iran is sanctioned from banking from the US and EU but is still a major Bitcoin mining center.
- phpnode 6y ago
  All it takes is for the US and EU to ban cryptocurrency itself and the problem goes away. It doesn't matter if mining is done in countries beyond their borders because the demand will go through the floor and those countries will have no incentive to keep wasting energy on it. The idea that cryptocurrency is beyond government control is fundamentally wrong. Most people don't want to be criminals.
  - paulgb 6y ago
    Yes, they could block the fiat pipes out instead of the crypto pipes in. Even if it wasn’t a perfect plug, it would devastate the prices and might cause the whole industry to unravel.
lifty 6y ago
I agree with you. And the irony is that the western wealthiest countries have the highest carbon footprint per capita. So the biggest impact would be made by changing our own lifestyles, but it's easier to rip on crypto art than give up your laundry dryer or SUV.
- paulgb 6y ago
  It might make NFT fans feel better to imagine their detractors getting around in an SUV, but I think you’d find that a lot of us are anti-SUV (both aesthetically and in favor of different incentives around fuel consumption) as well.
  - lifty 6y ago
    Not an NFT fan but point taken. We need to go at this from all directions, but picking energy use cases one by one will make a mess of it. We need incentives at the base layers (energy production, fuels etc.)
OskarS 6y ago
The difference between manufacturing and crypto is that manufacturing actually, you know, manufactures stuff. It makes stuff that is useful to people. It contributes to human society. The energy consumed to power cryptocurrencies contributes nothing to society. It's literally destroying the environment in order to run as many SHA256 hashes as possible per second.
- matheusmoreira 6y ago
  This problem is specific to proof of work systems. Alternative solutions are already being designed and implemented. Whether existing coins like bitcoin, ethereum and monero will implement these new systems is unknown. > The energy consumed to power cryptocurrencies contributes nothing to society. This is simply false. The energy spent guarantees the integrity of the decentralized ledgers that power cryptocurrencies. Perhaps there are better solutions out there but it's wrong to say that the energy consumption produces no value.
  - OskarS 6y ago
    Whether or not other systems are possible is not really relevant: cryptocurrencies as they exist today work like this. The fact that one day potentially we will have proof-of-stake doesn't change the fact that today we are destroying the earth for no reason at all.
    - matheusmoreira 6y ago
      Destroying the planet? Don't exaggerate. Even the submitted article has the following disclaimer: > Of course even these figures — and anything an individual does — are a drop in the ocean of global emissions (~50 billion tonnes CO2e). There are much higher priority targets for carbon footprint reduction. Eventually cryptocurrencies will use different less expensive algorithms and electricity generation and storage will be a lot friendlier to the environment.
  - danaris 6y ago
    > The energy spent guarantees the integrity of the decentralized ledgers that power cryptocurrencies. This is not of anywhere near sufficient value to society to justify the obscene amount of resources consumed for it. Personally, I would say that it, in fact, contributes nothing to society.
tim333 6y ago
Rather than declaring war which is impractical, you can work out a fine based on tons of CO2 or whatever and put it as a tariff on their exports.

mhluongo 6y ago

I've been avoiding this discussion on HN for months now because most of it appears to be in bad faith / wholly misinformed. But okay, I'll bite. > there is no way to tax them You put a heavy tax on power consumption. Done. > just move to somewhere with less environmental controls Crypto isn't the first industry to take advantage of tax arbitrage. By this logic, few businesses should run in the US.. and yet the only ones commonly taking advantage of havens and tax arb are larger orgs with the resources to structure. Business and money are fluid, but not that fluid.

paulgb 6y ago
> Business and money are fluid, but not that fluid. Manufacturing and moving physical goods is not fluid, but creating and transferring a fungible, pseudonymous asset is. It would be possible for a country to block or put a tariff on imported goods from a country that didn’t do enough to curb carbon emissions, but it wouldn’t be possible to block imports of crypto without overstepping.
Retric 6y ago
Miners outside the US are paid by US investment into crypto. It’s an externality with multiple solutions, but increasing the cost of electricity in the US does nothing.
quickthrower2 6y ago
How do you politically get the world to agree on a power consumption tax? I like the idea but it seems unlikely at a global level.

nivenkos 6y ago

Electricity prices?

pavlov 6y ago

Tax the outflows at crypto exchanges. The only reason anyone cares about this stuff is that you can sell it to the next sucker for real money. Make that unappealingly expensive, and the retail investors will go away.

bhupy 6y ago
That defeats part of the purpose of a carbon tax. In theory, having all crypto be on non-carbon energy is ecologically safe. A carbon tax applied at the level of energy purchase is the most reliable way to move even crypto energy consumption to renewables.

bhupy 6y ago

You can target the energy suppliers directly, who then pass the cost on to consumers of the electricity. With a sufficiently high tax, it becomes unprofitable to mine crypto using non-renewable energy. In theory, if the world had a high energy PoW blockchain solely powered by solar energy, that would be ecologically harmless.

DrewRWx 6y ago
Except that would generate the same sort of run on solar panels and/or their constituent components that is did for GPUS before ASICs got big. Solar panels that could otherwise be used to replace fossil fuels.
- bhupy 6y ago
  > Except that would generate the same sort of run on solar panels and/or their constituent components that is did for GPUS before ASICs got big. Yes, and there's nothing inherently wrong with that, because supply isn't constrained. For any good (or service) for which there is sufficient supply elasticity, when demand increases prices increase temporarily, but that's then followed by an increase in supply to meet that demand. The inflation adjusted price of high-end GPUs has been basically flat since 2000 -> https://hexus.net/tech/news/graphics/103399-inflation-adjusted-price-history-high-end-nvidia-gpus-tabulated/ https://hexus.net/tech/news/graphics/103399-inflation-adjust.... Insofar as there has been variation, it has largely been due to other confounding variables. In other words, solar panels will be used to replace fossil fuels no matter what. As long as there's a carbon tax, all crypto mining does is stimulate the demand for solar panels. Right now, I stand to gain a lot of money by starting a solar panel manufacturing company (because of crypto), but the net result (fully developed solar panel supply chains) is still good for humanity no matter what. That only happens if we have targeted environmental policy that magnifies that incentive.

snarf21 6y ago

You don't stop crypto by taxing it. You stop it by banning it at the ISP level. It won't stop 100% of transactions but the price would crater for Bitcoin to $10 and that alone will kill it.

gruez 6y ago
Bitcoin runs over tor, you know.
- snarf21 6y ago
  True, but what percentage of user who own on Coinbase are going to setup Tor to buy/sell Bitcoin? What percentage are going to be comfortable setting up a Trezor? I did say it wouldn't stop 100% of transactions. If a government bans it, the hedge funds are dumping their positions too. Bitcoin would go back to being a $5 crypto. To be clear, I'm not sure the US government is poised to do this. I was merely saying that you can't carbon tax it out of existence.