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Bitcoin Is Acting Like Just Another Tech Stock
- acchow 4y agoI have heard crazy things like crypto holdings used as margin for loans. Does anyone know how big that market was?
- MBCook 4y agoExcept it pollutes more than entire countries. And most tech stocks produce something of value. Even if that’s just funneling VC money into underpriced cab or food delivery service.
- vmception 4y agoIt uses more energies than entire countries, just like every industry that uses orders of magnitude more than bitcoin. Energy =/= pollute Focus on the bad actors that are polluting, occasionally you’ll find a miner
- endisneigh 4y agoSome industries use more energy but do more useful things. The question is what’s the minimum to do something. Bitcoin uses more energy than the alternatives. A wood burning stove is wasteful, a heat pump, not so much. Why? Because what’s important is the difference in energy between the action taken and the most efficient action to complete a task.
- vmception 4y agoEnergy != pollute Typically this desire for any other use of energy to occur relies on not understanding why that wasnt occurring beforehand
- MBCook 4y agoEnergy does not come from nothing. A large amount of it comes from polluting sources. In those cases there is a very direct relationship between the creation of energy and pollution. Clean energy is obviously better, but suffers from a fundamental problem: energy is fungible. If mining takes up 10 MWh of juice, anyone else who would have used that energy can’t. So they have to use other energy. Often fossil fuel based energy has to make up the difference. For all intents and purposes the mining used that fossil fuel energy. If mining only used excess electricity produced by clean power plants, there would be no problem. But it’s not incentivized to use extra energy, it’s incentivized to use cheap energy. If energy can be generated by fossil fuels cheaper than what you can earn from mining, miners will use that energy. Producing pollution that wouldn’t have otherwise existed. Even if mining only used spare energy generated from clean sources, using that energy means it can’t be stored to be used later, like at night. Possibly necessitating polluting generation later. (I know storage isn’t common today.) If you can explain how mining either does or feasibly could given real incentives use only spare non-polluting energy I would love to know.
- vmception 4y agoSure, the flare gas sites that are (or arent) connected to the grid are exactly a case where bitcoin mining is taking from no other use, and actually reducing very quantifiable pollution There are likely several gigawatts of this kind of energy in north america and the amount of energy used this way and for mining in total will continue to increase without causing more pollution This is due completely to market forces as well, which is worth saying because more mining will migrate to this without it being some altruistic response to environmental outcry
- datadata 4y agoEnergy is most definitely not fungible. The availability of energy and demand for energy can vary by greatly location. For it to be fungible, energy would need to be free to transport, or demand for energy would need to be location insensitive. Bitcoin actually does a lot of good things here because it is location insensitive. For stranded energy, say methane flare gas, there is not an economical way to use the energy of this gas because transport is too expensive and demand is too far away. In this way, the bitcoin mining is consuming energy that wouldn't actually otherwise be marketable. It is also greatly reducing greenhouse emissions without demand for the energy, the methane would be burned, which has much worse emissions than when consumed in a generator.
- solveit 4y agoThis discussion will go nowhere. Clearly the pro-Bitcoin crowd thinks proof of work is the most efficient way to get a permissionless, trustless, decentralised currency. And the anti-Bitcoin crowd either thinks 1. It's not the most efficient way and there's an alternative (e.g. Proof of Stake) or 2. It may or may not be the most efficient way, but Bitcoin doesn't provide the value to justify the carbon emissions ('just tax carbon commensurate to its negative externalities and let people decide for themselves', he says helplessly)
- vmception 4y agoI’m mostly avoiding the utility argument because the stranded energy reality is so much better As its not taking away from another use of energy and it’s reducing pollution, and is more likely to be the majority kind of bitcoin mining
- upsidesinclude 4y agoThis deserves to be the top posted comment, but will certainly never be. Controversial Take: There is effectively no ceiling on the value potential of Bitcoin. If you live in a hyperinflationary environment, of which there are tons of examples in the last 100 years, the value is known. To people living with the $dollar and expecting endless monetary superiority, it is hard to recognize. It's important to note, there is incentive for miners to use renewable energy. Vast amounts of capital have propped up renewables that languish for lack of a proper demand. Wind isn't on demand, nor is solar. But there's never any discussion of the waste and pollution that subsidized unproductive green energy solutions produce. Mining can utilize 100% of that supply. It acts as a reinforcing mechanism for investment in clean energy. How is this lost on people?
- woodruffw 4y agoBitcoin's energy use is pollution in the strictest sense: it is quite literally wasted as part of the proof scheme. Some of that energy might come from renewable sources, but plenty of it is coming from coal and dinosaur juice. This is true of lots of industries, but even our most wasteful (raw aluminum processing?) or grossly extractive (gold mining?) industries produce actual materials of value.
- nr2x 4y agoFast Fashion is pollution then as well, and that’s absolutely horrible environmentally and in regards to factory conditions. There aren’t any BTC sweat shops as far as I know.
- woodruffw 4y agoI don't understand this response. Why would you think that I would be in favor of fast fashion or sweatshops? These are bad things. That being said, I wouldn't rest on your "Bitcoin is free of slave labor" laurels so quickly[1]. [1]: https://qz.com/1978807/bitcoin-has-a-xinjiang-problem/ https://qz.com/1978807/bitcoin-has-a-xinjiang-problem/
- pessimizer 4y agoAt least "fast fashion" also pollutes the world with clothing.
- raggi 4y agoeven if all the sources were green, and they're not, the energy is being poured into the atmosphere as heat, which is still pollution.
- datadata 4y agoWhat is your definition of pollution which includes any heat? Is a hurricane pollution?
- vmception 4y agowhere can I read about that, could potentially change my view, in some circumstances I think the pollution reduction is greater and I also think dissipation is different than hydrocarbon presence
- version_five 4y agoI couldn't read the article, but I think part of the significance is that bitcoin is believed by some to be a new gold standard that investors would fly to as a store of value and medium of exchange when other markets are failing. But the reality is that it performs no differently than a volatile tech investment, and in doing do negates a big part of it's putative value proposition. I agree with everything in your comment, I just think it's worse than an energy intensive, non contributing tech stock, it also doesn't do any of the things that people talk up as reasons to buy it.
- JKCalhoun 4y agoAt least when Apple was circling the drain back in the late 1990's it had assets that more or less meant there was a floor for its stock price. I see no floor for crypto.
- deleted 4y ago[deleted]
- charcircuit 4y ago>it had assets That doesn't mean there is a floor. If there is no demand for any of those assets they would be worth nothing. USD doesn't have a floor either. One day everyone could just decide it's worthless scraps of cloth.
- medler 4y agoUSD is fundamentally different from cryptocurrency. For one thing, there will always be demand for USD because Americans have to pay taxes in dollars. If you’re an American and you make $X in a year, you have to buy ~1/3 of that in USD to pay your taxes, no matter what.
- charcircuit 4y agoAmerica could get rid of taxes or stop existing altogether. There always exists a risk of demand drying up.
- IAmEveryone 4y agoThe article is written as a response to claims that Bitcoin is an asset (class) different enough from stocks to be useful to diversify a portfolio. It's pointing out that, at a correlation of 0.86, it really isn't. The headline doesn't quite convey this meaning.
- MBCook 4y agoWhich is a reasonable point. It really follows tech stocks pretty closely. But in my mind it’s still an unfair comparison because tech stocks generally have some kind of fundamental tangible value. It may be worth 1/500th what the market cap is, but it’s there. I don’t see that with Bitcoin. Just insane wastes of resources and pollution creation.
- chris123 4y ago
- mind-blight 4y agoYou can disagree, but this comment really isn't helpful. If you have a point, then please argue it. Ad hominem attacks are not a valid rebuttal
- deleted 4y ago[deleted]
- jagger27 4y agoLook at the narratives you’re regurgitating yourself in this very thread.
- colinmhayes 4y ago
- kache_ 4y ago
- chris123 4y agoBitcoin and proof of work are one of the most important innovations in human history.
- perardi 4y ago…well, even if you don’t consider naturally occurring phenomena like fire to be a human innovation, I’d argue things like “the written word” or “mathematical notation” or “formal logic” are perhaps a bit more important, and one might even say foundational to Bitcoin.
- bluehorseray 4y agoProof of work existed long before bitcoin, and I haven't seen any evidence that bitcoin is an important innovation despite it being 13 years old. Send it to zerooo
- version_five 4y agoBitcoin is very smart. When I first learned about it, I thought it was so cool how it all came together, the combination of cryptographic security, distributed trust, even a Forth-like mini language built in. I made my own coin, I played with the source code, I made my own nonstandard protocol that used a bitcoin blockchain (unfortunately I never bought any bitcoin, but at any given time it's a terrible investment, even if it's paid off retrospectively). Anyway, I say all this because I really find it clever, and I really wanted it to be able to do something useful, but the reality is, it doesn't. It's never going to be useful, it's been adopted by scammers and mountebanks, it has no utility and will cause so much harms in the scams that it supports. So while it seems like a cool innovation, and from a purely technological standpoint it is, in reality it's poison. In that regard, it has (sorry for the tired analogy) a lot in common with communism. Cool idea, doesn't work at all, destroys lives. We need to let it go.
- bogomipz 4y ago>"When I first learned about it, I thought it was so cool how it all came together, the combination of cryptographic security, distributed trust, even a Forth-like mini language built in." Interesting, could you elaborate on the Forth bit? Where does this fit in? This is the first I've heard of it but admittedly I don't know that much about Bitcoin.
- treve 4y agoI have all the same concerns regarding pollution, but Bitcoins rise has made me think a lot about the 'value part' in other stocks. If Bitcoin's price can get this high without the 'intrinsic value' or producing something, then this effect probably also exists for other stocks. And this made me wonder: how big of a factor is this in other tech companies. The more I think about it, the more I feel that it must be the majority for many of them. Many companies operate at a loss and are just pumped up to push up metrics, just so someone else will pay more for it in the next round.
- yata69420 4y agoWhen you realize what dollars are, you're really going to freak out.
- pigtailgirl 4y agosame thing happened in March 2000 - browsers with no products and domains with no users were public - https://www.youtube.com/watch?v=25_WjiZnvQk https://www.youtube.com/watch?v=25_WjiZnvQk first dot com crash tech learned you actually need a product when the markets go south - now (second) tech is learning you need an actual good product when the markets go south --
- majormajor 4y agoYeah, people have bought stocks on future expectations - specifically, future expectations of being able to sell it for more than they bought it, and for more than if they bought something else instead - for quite a long time, compared to buying just on what has already happened. But they still use concrete financials (e.g. growth of revenue is just the derivative of revenue) to make those decisions, and are assuming that the future buyers will be looking at similar numbers that are based in the same real economic business process. The fundamental case for bitcoin-as-an-investment[0] is much less well-defined, and differs far more depending on who you ask. [0] bitcoin-as-currency is a different frequently-talked-about potential future state, but not as relevant to the "acting like a tech stock" discussion
- treve 4y ago
- nr2x 4y agoHow many resources do the employees and resources of Visa and Mastercard consume? BTC at least has very few humans, and humans consume resources and create waste. So, what does a more comprehensive measure than core time look like wrt global warming and payments? I’m not sure the answer, but I’m also sure it is not simple.
- atleta 4y agoHow many? I keep hearing this question as if asking it was a valid argument in itself. (Though, to be fair, you do underline that you don't know the answer.) Regarding your question: whatever they do, those humans will consume resources and create waste. We can't delete them if we do away with Visa :). Sure, they, in theory, would be able to work on something else, freeing up their resources, but that wouldn't decrease the resource use of humanity. Also, people keep comparing BTC's current resource use to the bank system (I think that includes the CC companies as well). However, very few transactions are done with BTC compared to the world financial system (or even just Visa). And if adoption grows, BTC price grows and if BTC price grows (or, in other words everything devalues relative to BTC) then mining rewards grow (measured in other assets) and if mining rewards grow then new miners will join and that means using more energy. I think I've seen a comparison between Visa and BTC measuring how much energy each used for doing a single transaction (or for moving a set amount). Visa was 10 or 100 fold more efficient. Even back then.
- Seam0nkey 4y agoI actually think you give the parent argument just a tad too little credit. If crypto was useful as a currency (and, as you point out, if it is comparably as energy efficient as visa), that would be an effective refutation to the energy consumption argument; freeing up human resources to do something else would be a substantial net benefit of the system for society. However, crypto does not behave to act effectively as a currency; it would be an awful idea to replace the global financial infrastructure with crypto thus the energy costs are here to stay.
- atleta 4y ago
- deleted 4y ago[deleted]
- daniel-cussen 4y agoThat pollution is what protects the integrity. It's not waste. It's like a standing army patrolling a bank. In fact those miners are the number one private security of any currency or bank in the world, by orders of magnitude. And second, every dollar blockchain companies make is a dividend of that army patrolling the bank. Not a whole lot of counterfeit bitcoins going around, unlike some currencies I could mention. Treasuries also spend a lot of money protecting their currency, the Secret Service for instance, which works for the Treasury of USG, is mandated to stop counterfeiting. Who gets better results for the money, bitcoin or the Treasury?
- Johnny555 4y ago“It delegitimizes the argument that Bitcoin is like gold,” said Vetle Lunde, an analyst for Arcane. “Evidence points in favor of Bitcoin just being a risk asset.” People said that Bitcoin is like gold, an actual physical asset?
- next_xibalba 4y agoWhat is the intrinsic value of gold?
- whatever1 4y agoManufacturing & jewelry. If you cut the supply of gold tonight, tomorrow morning there will be lost utility in the society irreparably. If bitcoin disappears tonight, tomorrow will be Thursday.
- next_xibalba 4y agoBrass can also be used for jewelry. Why is gold more valuable than brass? Look up gold’s use by mass. It is dominated by gold’s value being a social construct.
- whatever1 4y ago"Brass can also be used for jewelry. Why is gold more valuable than brass?" Because your wife says so. Yes jewelry in genaral is a social construct, but it is not replaceable. At least it was not for the past 5000 years.
- hammyhavoc 4y agoWow, what a sexist archaic view. Learn about scarcity value.
- throw-ru-938 4y agoMy cat's hair is even more scarce. Does not mean it has more value than gold.
- headsoup 4y agoWith some differences in how the 'market' is run. How's that USDT dollar peg going at the moment btw...
- ENOTTY 4y agoUST's (Terra) peg is the one that is totally broken. It's an algorithmic peg, with its reserves in Bitcoin. USDT's (Tether) peg is fine right now (how much do you believe in commercial paper of unknown origin). And USDC's peg is also fine right now, and they claim to be backed by treasurys and actual cash.
- headsoup 4y agoUSDT is fine? It's been off-peg all day. I hope if you've got some you've read their terms and conditions. Do you remember the 42Mil fine they paid a couple of years ago for not actually holding reserves? I'm sure they're honest now though
- ENOTTY 4y agoWhen I wrote that it was fine. Now it's not.
- roflyear 4y agoTether is fine (usdt)
- demygale 4y agoTether is (mostly) fine today. But it’s an absolute, unmitigated scam and will collapse with the slightest pressure. As BTC declines, Tether’s backing declines as well, even as they print more Tether to pump up the price of BTC.
- latchkey 4y agoUSDT is doing relatively ok (right now). What failed over the last few days (and caused the big dump on the rest of the market beyond just the correlation to stocks) is a stablecoin called UST. If you want a heavy dose of whataboutism though... look at EURO/USD.
- hartem_ 4y agoPaywall removed: https://archive.ph/20220511184519/https://www.nytimes.com/2022/05/11/technology/bitcoin-price-crashing-stocks.html#selection-523.1-539.13 https://archive.ph/20220511184519/https://www.nytimes.com/20...
- deleted 4y ago[deleted]
- textbookrental 4y agoBitcoin fixes this. Read the white paper.
- latchkey 4y agoIn other news... https://www.afar.com/magazine/the-dollar-and-euro-are-almost-equal-right-now https://www.afar.com/magazine/the-dollar-and-euro-are-almost...
- twright 4y agoWhat happens if the price drops below what is profitable to mine? Do they scale back or stay the course because if other miners back out they’re more likely to be rewarded a block? I guess there’s a 51% attack vector there too if the price drops too much and enough miners stop mining?
- seizethecheese 4y agoIt was profitable to mine at a few cents per Bitcoin. It’s just about competition entering or dropping at different prices.
- woodruffw 4y agoIn theory, the mining rate scales back accordingly. In practice, the marginal cost of continuing to mine is probably very low: miners have made the upfront investment in the hardware, and many of them are located in areas where they're receiving artificially cheap electricity (or have reopened coal plants solely to mine[1]). In other words: large mining groups probably aren't feeling anywhere near enough pain yet. Economically, a 51% attack is unlikely: it would fundamentally compromise trust in the network, which would probably lead to selloffs and a crash. [1]: https://www.theguardian.com/technology/2022/feb/18/bitcoin-miners-revive-fossil-fuel-plant-co2-emissions-soared https://www.theguardian.com/technology/2022/feb/18/bitcoin-m...
- rabuse 4y agoThe difficulty will adapt to the slower block minting times, and those who stick around, will become profitable again. This is all written in the protocol.
- Barrera 4y ago> Arcane Research assigned a numeric score between 1 and -1 to capture the pricing correlation between Bitcoin and the Nasdaq. A score of 1 indicated an exact correlation, meaning the prices moved in tandem, and a score of -1 represented an exact divergence. > Since Jan. 1, the 30-day average of the Bitcoin-Nasdaq score has approached 1, reaching 0.82 this week, the closest it had ever been to an exact, one-to-one correlation. At the same time, Bitcoin’s price movement has diverged from fluctuations in the price of gold, the asset to which it has been most often compared. Without context, this analysis is meaningless. What's the correlation to various tenors of US treasury over the same periods, for example? What about Nasdaq/Dow correlation? How bout the correlation with gold? > “There was this undeniable retail belief that Bitcoin at the end of last year was an inflation hedge — it was a safe haven, it was going to replace the dollar,” said Ed Moya, a cryptocurrency analyst at the trading company OANDA. “And what happened was inflation started to become very ugly, and Bitcoin lost half of its value.” Selective amnesia. Zoom out and you'll see a massive bull market leading up to the first signs of sustained CPI growth. Buy the rumor, sell the news could also explain it as could many other things.
- majormajor 4y agoGold and Bitcoin are clearly separated recently. Gold was up and down some itself but right now is flat over the last year, Bitcoin down 40%+. More long-term, https://www.sciencedirect.com/science/article/abs/pii/S2214635021001052 https://www.sciencedirect.com/science/article/abs/pii/S22146... - "near zero" between BTC and Gold.
- perardi 4y agoI have a somewhat irrational skepticism towards cryptocurrencies, as growing up, my dad always warned me of the scams he grew up with, when people were (seemingly) convinced fiat currency was a conspiracy by “the bankers” to enslave the common folk, and then used that to hawk crap like investments in silver mines. And Bitcoin sure seems like a new iteration of that scam and/or conspiracy theory. At least with precious metals, you’d end up with something shiny at the end of it, and not a string of numerals on your phone.
- planarhobbit 4y agoYour dad was right, you know.
- upsidesinclude 4y agoYour dad, like most people, probably doesn't understand money. And the idea that fiat is bad for average people isn't just a notion. Fiat with inflation is designed to reduce the burden of debt (among other things). If I borrow lots of money for a long time, I want the money to be worth less as time goes on. Then, when I pay my debt, the cost to me is lower every month, even though the dollar amount is the same. If you have capital and leverage debt, this system is fantastic. If you are poor and cannot borrow, i.e. leverage debt, then your money supply is constantly reduced. Most people are poor, sad fact. Most people are not benefitting from this system. Bitcoin is designed to be free of control. Institutions have lots of control currently because they have more capital to invest and sophisticated trading techniques. They have purchased their way into a powerful position within the environment. This is irrelevant. Those people that have experienced hyper inflation already understand the implied value of Bitcoin. In time, everyone else will as well
- vmception 4y agoand those metal dealers sell the metals at a super wide spread putting the buyer at an immediate steep loss so sure they still have a shiny metal that they hope retains its value, but they dont recoup anything
- RichardHeart 4y agoWhy wouldn't it?
- RichardHeart 4y agoBTW, in a bear market, everything tends to perform like everything else.
- cuteboy19 4y ago... except gold. Which Bitcoin does not remotely resemble
- RichardHeart 4y agoWell, I hate to break it to you buddy, but gold is a horrible asset. Gold is cheaper nowt than 10 years ago. Yes the trash, USD has beaten it. Yes, I know, I have $9,000,000 of wrist watches made of it. But they appreciate because of their non commodity value. Now compare to tech stocks bought 10 years ago on average. P.S. I called the Bitcoin top roughly on the day, in 2017 and in this cycle. Happy to provide the proof if you doubt it.
- anm89 4y agoThis isn't surprising or complicated. In a liquidity crunch you sell whatever you've got. These assets are going to correlate because they are all interchangable: things you can get rid of to get cash.
- amorphic 4y agoA lot of people here seem to take the "Bitcoin has no intrinsic value and therefore is worthless" line. I don't hold any bitcoin and I don't feel strongly either way. But this piece by Lyn Alden provides some good insights into situations where Bitcoin might be valuable and why it may well have a strong future. Particularly compared to other, less widely-held cryptocurrencies: https://www.lynalden.com/gold-and-bitcoin/ https://www.lynalden.com/gold-and-bitcoin/
- iancmceachern 4y agoBecause it's not itself a thing of value. Non tech stocks which are essentially buying a portion of a business that is profitable, well run, and has physical assets that have value. Same thing for commodities, etc. Tech stocks and crypto are both in the dsme bucket of investing in ownership of a portion of something that may someday be valuable or profitable, but is not currently.
- notananthem 4y agoThe floor for crypto is there it's just a long ride down
- FloNeu 4y agoThe word you are looking for is 'bubble' maybe 'scam' - ok, maybe stock is appropriate... A 'stock' that's weeks away from being forbidden to be bought/traded in Us dollar or even banned like in china