Currency always has costs, but sometime they’re hidden.
Really hidden.
WaPo reports on the latest sources of computing power for crypto-currency miners:
As the popularity of virtual currencies has grown, hackers are focusing on a new type of heist: putting malicious software on peoples’ handsets, TVs and smart fridges that makes them mine for digital money.
So-called “crypto-jacking” attacks have become a growing problem in the cybersecurity industry, affecting both consumers and organizations. Depending on the severity of the attack, victims may notice only a slight drop in processing power, often not enough for them to think it’s a hacking attack. But that can add up to a lot of processing power over a period of months or if, say, a business’s entire network of computers is affected.
“We saw organizations whose monthly electricity bill was increased by hundreds of thousands of dollars,” said Maya Horowitz, Threat Intelligence Group Manager for Checkpoint, a cybersecurity company.
Which leads me to wonder just how much power, along with the concurrent wonder about amount of climate gases generated, is being used for cryptocurrency mining activities. Quartz had an article on this topic earlier this year:
A new study published in Joule—the first on the subject to undergo the rigors of peer review—argues that, globally, bitcoin mining consumes at least as much electricity in a year as all of Ireland (about 24 TWh). Worse still, it contends that the energy use is doubling every six months and could reach the annual consumption of the Czech Republic (about 67 TWh) before the end of 2018, which would be about 0.3% of the world’s electricity consumption. …
One of the early concerns over bitcoin’s electricity use was that almost all of it was sourced at polluting coal power plants in China. It’s likely true that a lot of it does still come from coal power plants, but in a bid to cut pollution the Chinese government has taken steps (paywall) in the past year, telling local utilities not to give crypto miners low-cost deals on electricity. The upshot is that many miners have since moved out of China.
In many of the places they’ve ended up, there is plenty of clean energy available. For example, the Canadian province of Quebec actively courted cryptocurrency companies to use the spare hydropower capacity it had built. The same is true of Iceland (with its spare geothermal) and Sweden (which, like Quebec, has plenty of hydropower).
That said, it’s not the fault of those mining for cryptocurrency that the world relies mostly on fossil fuels for its electricity. And just because there is a new and fast-growing source of electricity consumption is not enough reason for governments to regulate crypto companies.
No? I have to wonder about the necessity of cryptocurrencies – or lack thereof. I suppose a tradeoff comparing other sources of liquid wealth representation with cryptocurrencies would be necessary, but right on the face of it I do not agree with Rathi’s glib statement that regulation of cryptocurrency companies is unjustified on a power consumption basis. That may be true at the moment, but it’s a statement that does not scale. Today they may be consuming as much power as Ireland – but does the statement still apply when the amount of energy goes up two magnitudes?
Of course not. Not if there are more energy efficient alternatives available, such as old-fashioned cash.
But there is, even for this agnostic, a certain delicious irony in the thought that one of the drivers of our possible doom is our continued and outsized pursuit of, well, wealth. Because that’s what’s driving the miners. It’s true that they’re providing a valuable service, namely provision of new coins, but if we apply the lens of examining capitalist activity I wrote about concerning Lehman Brothers in this post, which I will save my reader the problem of digging out by quoting here:
I would contend, as did the author of that article, that it was a primary symptom of a foundational illness that ultimately doomed Lehman Brothers. Look, from a societal point of view, companies do not exist to make money. I know the general wisdom of the private sector would differ with me, but if you think it through, it becomes obviously right. The proper formulation is, Companies provide specific services thought to be useful to their consumers, and the best ones are profitable because they have the right combination of efficiency and service content.
Why is this important? It brings back into focus that a company is not an instrument for the implementation of greed, for the collection of more and more proxies of wealth, which can fluctuate in their value to a dismaying degree, by which I mean dollars (or whatever might be your local currency). The private sector wisdom leads to a corporate function which contributes nothing to the advancement of society.
… then there’s an uncomfortable link between the philosophically bankrupt institutions such as Lehman Brothers and these coin miners and the minimal goods they provide to society. Not that I deny that provision of new bitcoins is a necessity, but it appears, from the scale of energy use and the enthusiasm with which they’re pursued the generation of coins, that in the end the balance of social utility vs impact on morals as well as ultimate physical impact may lean towards the latter, suggesting cryptocurrencies may not be the great social leap forward – but an evolutionary dead-end.
Or worse.
Just for fun, there’s another site which appears to be tracking cryptocurrency energy consumption named Digiconomist. Here’s they’re their current chart:
