4 ms·

I don't think it's as simple as "just tweak the economics"; in places like upstate NY, there are very cheap electricity prices due to abundant hydro resources,

by NickM 4y ago

I don't think it's as simple as "just tweak the economics"; in places like upstate NY, there are very cheap electricity prices due to abundant hydro resources, so there are some big crypto mining operations that have set up shop to exploit that. But, of course, when demand goes up, prices go up for everyone; more demand isn't going to lead to the creation of more natural resources, so the benefits of cheap hydro are limited, and usage of them is a zero-sum game. Power companies have no incentives to discourage crypto miners, because obviously increased demand leads to more profits for them, while meanwhile the externalized costs are being paid largely by households and small local businesses. You could make miners pay more for electricity, but unless you charge them so much that it's no longer profitable and they go away, they're still going to be using that electricity, to the detriment of everyone else in the area. Better to just ban them entirely, IMO, but it's pretty hard for politicians to just unilaterally kill off entire businesses, even bad ones like these.

latchkey 4y ago
Upstate NY has hydro because it was developed to power the aluminum smelters that no longer exist after having shut down (thanks China!) and left multiple superfund sites. https://en.wikipedia.org/wiki/Moses-Saunders_Power_Dam https://en.wikipedia.org/wiki/Moses-Saunders_Power_Dam In this specific case, the power can't just easily be routed somewhere else because all the lines were routed directly to the plants. You can literally look on Google Maps and see the lines. Building new lines could be done but it is super expensive to do that. Up until the bitcoin miners came in and took over the plant, the power was just going unused.
- NickM 4y ago
  It sounds like you might be more familiar with the details of the situation than I am, but I'm curious how you would explain the results of this study: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3779720 https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3779720 If the Bitcoin miners in upstate NY are just using generation capacity that would otherwise go unused, why does their presence seem to be having such a dramatic effect on local energy prices?
  - latchkey 4y ago
    "Benetton and Compiani acknowledge financial support from Ripple’s University Blockchain Research Initiative." Ripple is a competing blockchain that doesn't use PoW. I'd say that the paper was funded to make Bitcoin look bad. It even starts off with two quotes that are not relevant. Further down in the article it even declares Ripple as a 'top crypto' among BTC/ETH, which in reality, while it does have a large mcap, it is orders of magnitude smaller than BTC/ETH. There was certainly some issues with the residential and small time miners in upstate new york. Most of that got banned, pretty quickly, in 2018 (5 years ago!). The larger miners, who took over the old smelters, and the ones drawing the most amount of power (by a lot), are definitely getting their feeds directly from the dam and those feeds were not being used once the smelters had shut down back in 2014. Why not look at other states that have a huge amount of hydro mining, like WA? They focused on, literally, one portion of one state. Is that enough of a data point? Another good tidbit... those dams actually need a constant draw of power to remain in service. Bitcoin is helping with that and providing a source of revenue that went away when the smelters shut down.

by NickM 4y ago

latchkey 4y ago

Upstate NY has hydro because it was developed to power the aluminum smelters that no longer exist after having shut down (thanks China!) and left multiple superfund sites. https://en.wikipedia.org/wiki/Moses-Saunders_Power_Dam https://en.wikipedia.org/wiki/Moses-Saunders_Power_Dam In this specific case, the power can't just easily be routed somewhere else because all the lines were routed directly to the plants. You can literally look on Google Maps and see the lines. Building new lines could be done but it is super expensive to do that. Up until the bitcoin miners came in and took over the plant, the power was just going unused.

NickM 4y ago
It sounds like you might be more familiar with the details of the situation than I am, but I'm curious how you would explain the results of this study: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3779720 https://papers.ssrn.com/sol3/papers.cfm?abstract_id=3779720 If the Bitcoin miners in upstate NY are just using generation capacity that would otherwise go unused, why does their presence seem to be having such a dramatic effect on local energy prices?
- latchkey 4y ago
  "Benetton and Compiani acknowledge financial support from Ripple’s University Blockchain Research Initiative." Ripple is a competing blockchain that doesn't use PoW. I'd say that the paper was funded to make Bitcoin look bad. It even starts off with two quotes that are not relevant. Further down in the article it even declares Ripple as a 'top crypto' among BTC/ETH, which in reality, while it does have a large mcap, it is orders of magnitude smaller than BTC/ETH. There was certainly some issues with the residential and small time miners in upstate new york. Most of that got banned, pretty quickly, in 2018 (5 years ago!). The larger miners, who took over the old smelters, and the ones drawing the most amount of power (by a lot), are definitely getting their feeds directly from the dam and those feeds were not being used once the smelters had shut down back in 2014. Why not look at other states that have a huge amount of hydro mining, like WA? They focused on, literally, one portion of one state. Is that enough of a data point? Another good tidbit... those dams actually need a constant draw of power to remain in service. Bitcoin is helping with that and providing a source of revenue that went away when the smelters shut down.