News: Bitcoin mining is not green, miners versus programmers, gold is cleaner than bitcoin, exchanges collapse, how to forge an NFT

- by David Gerard - 2 Comments.
  • This newsletter is so big because I was busy finishing up a commission for The New Issue. I’ll let you know when it’s out. $5-and-up patrons got to read it last night. [The New Issue]
  • You can support my work by signing up for the Patreon — $5 or $20 a month really does help a lot. [Patreon]
  • If you’d like to get yourself the books signed by the author, I have both in stock — go to this post and see how much to PayPal me!
  • Tell your friends and colleagues to sign up for this newsletter by email! [scroll down, or click here]

 

I require you to watch this video.

 

Smoking encourages cancer research

I had a coiner tell me that objecting to proof-of-work Bitcoin mining was colonialism — how dare a westerner like me tell China what to do! And never mind the bit where China is colonial in Xinjiang to the point of genocide, including Uyghur forced labour in the coal mines that power at least 25% of Bitcoin.

The realities of Bitcoin mining are bad enough that spurious talking points are all that bitcoiners have to defend their reprehensible coin.

The latest is a five-page memo from ARK Invest and Square: “Bitcoin is Key to an  Abundant, Clean Energy Future.” It was widely publicised by Jack Dorsey, of Square and Twitter, and Elon Musk. (The BBC got a comment from me too.) [Square, PDF; BBC]

The paper is a cynical exercise in Bitcoin greenwashing, claiming that Bitcoin mining will power the world with solar energy. It’s a quintessential Gish gallop: throw out a barrage of wrong and not-even-wrong statements, sprinkle with “could”, “might” and “incentives”, and ignore everything we know about Bitcoin mining in the real world.

The reality is: Bitcoin runs on coal. The Bitcoin hash rate dropped by 25% just a week ago — because one coal mine in Xinjiang shut due to an accident, causing power cuts across one small area of Xinjiang, and Bitcoin is so completely centralised that this crippled the hash rate.

Bitcoin mining is so ghastly and egregious that the number one job for Bitcoin promoters is to make excuses for it — any excuse at all, whether it makes sense or not. These new excuses don’t make sense either.

Digiconomist goes through some of ARK’s bad numbers that don’t add up. [Twitter]

FT Alphaville’s round mockery of ARK’s farrago of nonsense noticed this great line in the report: “energy management companies that specialise in both storage and mining could build software to decide in real-time the best use for a newly created electron”. I wonder where ARK plans to store the positrons. [FT Alphaville, free with login]

 

 

Crypto is why software developers can’t have nice things

Continuous integration (CI) systems take computer program source code, and build it afresh after every change — to allow quick testing of all changes. Some public CI services used to offer a free tier for small projects — but crypto miners, ever eager to make more friends, are spamming these services with CPU-based mining. [Layer CI]

CI provider SourceHut explained why their free tiers were being withdrawn: [sr.ht]

Malicious users have been deliberately submitting huge numbers of jobs under dozens of frequently registered accounts and deliberately circumventing our abuse detection to use as much of our resources as possible to mine cryptocurrencies. This exhausts our resources and leads to long build queues for normal users.

Another provider commented on Hacker News: [HN]

I think folks outside of the space simply do not understand how much time is being spent combating the issue. If we, for example, had a team of 20 working on our CI offering, we would have re-allocated at least 50% of them to work full-time on combating the miners. And this trend is not slowing, it is only accelerating.

Drew DeVault from SourceHut has been provoked into a general rant on the subject: “Cryptocurrency is an abject disaster.” [blog post]

Maybe your cryptocurrency is different. But look: you’re in really poor company. When you’re the only honest person in the room, maybe you should be in a different room. It is impossible to trust you. Every comment online about cryptocurrency is tainted by the fact that the commenter has probably invested thousands of dollars into a Ponzi scheme and is depending on your agreement to make their money back.

Because of crypto, any Turing-complete service you offer to the public for free will be hit by crypto parasites.

 

 

Baby’s on fire

When you call out Bitcoin mining, every coiner replies: “what about gold mining, huh?” Franck Leroy runs the numbers: bitcoin is more polluting than gold on every axis. Bitcoin uses twice to seven times the energy per dollar out, and twenty-four times the metals per dollar. And a single Bitcoin transaction produces more CO2 than shipping a ton of gold around the world. [Medium]

FOR SALE: bulk order of second-hand SSDs! Totally not used for crypto mining! Ignore burnt smell and charred and melted bits. SSD manufacturer Galax says that using its SSDs for proof-of-space crypto mining will void the warranty — mining Chia is sufficiently write-intensive to wear out even modern SSDs. (Let’s rename proof-of-space to proof-of-e-waste.) Jiahe Jinwei, another SSD manufacturer, has announced special mining SSDs — though it’s not clear how these are any different from normal SSDs inside. [WCCFTech; WCCFTech]

If you’re one of the odious fools using Chia to do to hard disk prices what crypto mining did to video card prices, you can apparently call yourself a Time Lord. It turns out the Daleks did nothing wrong. [Github]

 

 

Turkish crypto exchanges collapse

Faruk Fatih Özer, founder of Turkish crypto exchange Thodex, seeks to expand internationally! To this end, he flew out on 21 April, just as $2 billion of cryptos from the exchange turned up missing. Thodex had been having completely temporary withdrawal issues for a while, was put up for sale, and is now temporarily shut for business, permanently.

Özer also paid the most painstaking attention to money-laundering compliance — he took Know-Your-Customer data for hundreds of thousands of users with him, including scans of their national ID cards. He is presently in Albania; Turkey has arrested 62 people trying to track Özer down, and is seeking to extradite him. [Haberturk, in Turkish; Bloomberg; Bloomberg; Bloomberg; Reuters]

update: $125 million of cryptos from Thodex has been spotted moving to the Kraken exchange in the US, which has access to actual US dollars and not just tethers. [Twitter]

A second exchange, Vebitcoin, also shut suddenly. Vebitcoin said: “Due to recent developments in the crypto money industry, transactions have become much more intense than expected. We regret to state that this situation has led us to a very difficult financial position. We have ceased activities in order to fulfill all regulations and claims.” That is, customers were so rude as to try to withdraw the cryptos that were supposed to be on the exchange. [Sozcu, in Turkish; Reuters]

Vebitcoin founder İlker Baş and three others have been arrested. Two Vebitcoin customers actually hopped the wall of Baş’s villa — “We deposited money in Vebitcoin. We came to talk with İlker Baş about our negative experiences. We did not hurt him.” The police released the two.  [Milliyet, in Turkish]

Turkey is considering requiring crypto exchanges to custody their coins with the government, ‘cos they clearly can’t be trusted with them. Truly, the final triumph of Bitcoin anarcho-capitalism. [Bloomberg]

 

 

Hotbit is down for temporary unscheduled rugpulling

The Hotbit crypto exchange is based in Shanghai and Taipei. It’s a Tether exchange with literally hundreds of trading pairs — the sort of exchange that never saw a minor altcoin it didn’t like.

Hotbit was suddenly taken down for maintenance at 01:03 UTC 30 April “in order to optimize server performance,” with a promise to be up by 10:00 UTC. [Twitter]

At 10:40 UTC, Hotbit announced: “Hotbit just suffered a serious cyber attack starting around 08:00 PM UTC, April 29, 2021, which led to the paralyzation of a number of some basic services.” — that is, five hours before the “maintenance.” [Hotbit]

Hotbit says the attacker failed to steal the cryptos — but, in a fit of pique, deleted the user database. They are now rebuilding all servers from the ground up, and expect to be back in a week or two.

LibreHash goes through the announcement, and concludes Hotbit are full of it, are likely completely screwed, and are unlikely to come back. [LibreHash]

 

 

Other lie-dream casino news

Revolut has long offered “crypto trading” in a walled garden — you can’t get cryptos in or out, just trade them in the app. But you will soon be able to withdraw small amounts of crypto from the service! Revolut think their anti-money-laundering, based on destination addresses and customer behaviour, is up to the task — presumably they’ve improved it since a whistleblower came forward in 2019. No word on crypto deposits as yet. [FT Alphaville, free with login; BBC, 2019]

South Korea is looking at how to deal with crypto issues in general — particularly the incredible amounts of illegal behaviour. They’re starting by putting the FATF guidelines into place. Several crypto exchanges are shutting down — because they don’t have bank accounts in their real names, and can’t get accounts when the banks know who the account is for. [Yonhap; Korea Herald]

The Binance crypto exchange now lets you trade tokenised stocks! Binance Deutschland buys shares in Tesla, Coinbase and Apple, and offers tokens claiming to represent chunks of them on Binance.com. BaFin, the German regulator, is unimpressed, and has told them to stop offering these derivatives of securities without a prospectus. BaFin had to do something after the Wirecard debacle to look less completely useless, and Binance stuck their necks out to be the something in question. [Financial Times, paywalled; BaFin press release, in German; Financial Times, paywalled]

You’ll be reassured to hear that Coinbase’s horrible customer service is entirely within the law. [Yahoo! News]

 

 

Central banking, not on the blockchain

Alipay and WeChatPay will now be working with the DC/EP e-CNY initiative that was set up by the People’s Bank of China to compete with them (amongst way too many other purposes), and that isn’t technically a CBDC any more, quite. [Global Times]

De Nederlandsche Bank suggests you can get consumers to adopt a CBDC by paying them to do so, with a good interest rate. I’m not clear on how this constitutes a use case. [DnB]

The European Investment Bank issues its first ever digital bond on a public blockchain, specifically Ethereum! After a page of quotes about how amazing this is, the press release finally details what’s actually happening — bond tokens are purchased using actual money; the joint lead managers (Goldman Sachs, Santander, Societe Generale) settle the underwriting against the issuer using tokens representing euros (the press release touts this as “Central Bank Digital Currency (CBDC)”); at maturity, the bond is repaid in actual money.  The blockchain doesn’t let you do anything that bond issues don’t do already — but it lets you put “blockchain” in the headline. [EIB press release]

Wired writes up CBDCs — and calls out the push for CBDCs for neglecting to first find a use case. [Wired]

 

 

Diem’s not dead! Look, it’s still twitching

An unnamed person at Facebook says that Diem will run a very limited trial later in 2021 — if they can ever see their way clear with the regulators. [CNBC]

Yet another Diem face leaves — Libra/Diem’s PR guy Dante Disparte started work at Circle a couple of weeks ago. Disparte is the guy who pushed Libra/Diem as “digital money,” and called existing electronic payments “analogue money.” This is a terminology nobody else has ever used, but I heard him use that one twice — it seems to have been a personal favourite talking point. Disparte says in his intro publicity video how Circle is “an operational business, it’s not an aspirational one” — that is, you can only spend so many years of your life talking up vaporware that’s stuck in development hell. [Circle]

Carolyn Everson, VP of Facebook’s Global Business Group, seems to think Diem has something to do with NFTs — “the future of cryptocurrency and NFT’s and digital wallets.” She also wishes anyone would use Facebook Pay in Messenger. [Yahoo! Finance]

 

 

I fought the law

NatWest Bank in the UK officially recognises cryptocurrency use amongst its customer base! The bank will refuse to serve business customers whose business is substantially to accept cryptocurrencies. The head of the lender’s risk committee called cryptocurrencies “high risk” in an online shareholder event. The bank will perform extra financial crime checks on personal customers who touch cryptos. [Guardian]

The tax office of the city of Seoul, South Korea officially recognises cryptocurrency! Specifically, the city has been seizing cryptos from tax delinquents. [Yonhap]

Doing crimes on a permanent immutable public ledger of all transactions remains not the brightest move. Bitcoin’s way around this was “mixer” services — send them coins, the coins get shuffled through a pile of obfuscatory transactions, send them back minus a percentage! (Possibly minus 100%.) This is a literal description of what money laundering does, so it’s unsurprising that the authorities have a number of opinions on this sort of thing, and FinCEN declared crypto mixers were money transmission businesses, since they are.

Anyway, Roman Sterlingov, the founder of old-school mixing service Bitcoin Fog, has been busted by the IRS as well as the FBI. The key link that busted Sterlingov was apparently blockchain data on his purchase of the domain name bitcoinfog.com, using Liberty Reserve dollars bought with bitcoins (statement of facts, p7-8). [Justice Department; Wired; statement of facts, PDF; case docket]

The Babuk Locker ransomware gang has threatened to expose Washington DC police informants if the DC Metropolitan Police don’t pay the ransom. Babuk Locker sent file server directory listings, claiming to have downloaded 250 gigabytes from the server; it’s not clear if they locked the files on the server. [Record]

The US government is pushing for regulation to deal with the scourge of ransomware, “sources familiar with the work of a public-private task force said.” The main aim is to pierce the pseudonymity of crypto transactions. [Reuters]

Dustin Volz from the Wall Street Journal tweets: “Newly installed DAG Lisa Monaco announces 120-day ‘cyber review’ at DoJ during remarks at Munich Cyber Security Conference. Says the review will look for best tools available to disrupt hackers using digital currency, AI, and supply chain weaknesses to support their schemes.” [Twitter]

“But whatabout all the money laundering banks do, huh?” If you point out the bitcoiners to target first, I assure you that I heartily support billion-dollar fines for every one of them as well.

 

 

Sales receipt fan fiction

Someone calling himself Monsieur Personne (Mr. Nobody) has forged Beeple’s $69 million NFT — he’s set up something that looks very like Beeple’s NFT and listing. The ArtNet story gives the impression that Personne had found a way to forge an ERC 721 token — a hole in the specification or something — but the CoinDesk story goes into technical detail: Personne made an NFT that looked superficially similar in a blockchain explorer, and on Rarible’s website. [ArtNet; CoinDesk]

Outlier Ventures is doing an ICO for NFTs! They’re using what they themselves call a SAFT-like mechanism — a scheme to turn securities into not-securities, an idea that failed disastrously when Telegram tried it. Outlier maintain that their NFT ICO is, nevertheless, not an offering of securities. Lawyers who know crypto say otherwise, such as Rohan Grey: “They’re saying here, ‘Access NFTs effectively give holders an exposure to the future franchise value of an NFT,’ right? I mean, that’s almost word for word out of the Howey Test.” Gabriel Shapiro calls Outlier “astonishingly naive for 2021.” [Outlier press release; Decrypt]

That the NFTs existed already will likely make no difference for Outlier’s scheme. Precedents include an offering of collectors’ coins (the physical kind) that was ruled to be a security — the offering was ruled to constitute an investment contract, as specified by the Howey test. [Casetext, 1975]

Yorkshire Post: Are NFT’s worth a punt, or is someone else getting rich quick? With a quote from me. [Yorkshire Post]

An NFT auction of a house fails — buyers kept asking about highly technical and industry-specific issues like “how exactly does this convey legal title?” [CNN]

Of course musician Imogen Heap — famed for her widely-lauded 2015 blockchain music promotion that grossed a total of $133.20 — has gone NFT! [Twitter]

Hasbro is considering NFTs for Magic: The Gathering! Perhaps Hasbro could start some sort of Magic: The Gathering Online Exchange. [Polygon]

 

 

The 500 dollar bottle of wine

Tether releases another attestation! It’s the same style of non-audit “attestation” Tether supplied in March, with the same caveats from their accountant. Anyone who calls this an audit, or as good as an audit, is lying to you. This style of attestation will also be utterly inadequate to meet the requirements of the settlement with the New York Attorney General to publish a breakdown of Tether’s claimed reserves — let alone the much more detailed version that Tether has agreed to give the NYAG. Both of which are due around 17 May at the latest. [press release; attestation, PDF]

A properly cynical Financial Times article on Tether, with a quote from Bennett Tomlin. [Financial Times, paywalled]

Coinbase goes public, and is now going Tether! They’re accepting tethers for deposit, though you can’t trade them yet. The launch keeps getting delayed. Amy Castor wrote up this toweringly bad idea. [CoinDesk; Amy Castor]

Bitcoin done Brexit — Nigel Farage’s top donor in 2019 has been outed as Bitfinex shareholder Christopher Harborne. Mr Harborne was previously a donor to the Conservative Party. [Protos]

 

 

Things happen

Bitcoin use case found! Joel Greenberg offered $250,000 to Roger Stone to get him to ask President Trump to sign an unspecified blanket pardon for Congressman Matt Gaetz … in Bitcoin. The offence he hoped to secure a pardon for was, apparently, sex with underage girls — another amazing coincidence of that particular charge showing up in Bitcoin. [Daily Beast]

I’d like to note that I mentioned Greenberg’s own six charges for sex with underage girls well before the rest of the crypto press — and the bit where he was mining bitcoins in his office on government electricity. If you haven’t been following the Greenberg saga in the Orlando Sentinel over the past year, Lawyers, Guns & Money quotes Brianna Wu’s rundown of the story. [Lawyers, Guns & Money]

Because I got high — I can’t beat the original headline: Billionaire Took Psychedelics, Got Bitcoin and Is Now Into SPACs. The billionaire in question is Christian Angermayer, who also works with Mike Novogratz of Galaxy Digital. [Bloomberg]

The Block has bought out its non-employee shareholders, including its founders. “The Block is not yet profitable.” Not detailed: who owns it now. [Axios]

Bitcoin is completely immune to confiscation! Except if, say, armed men forced their way into a hodler’s house and threatened his keys out of him. But that never happens. [Calgary Herald]

Grifters of old come out for crypto grifts — “nutritionist” and not-a-doctor Gillian McKeith, the Awful Poo Lady of 2000s UK television fame, is pumping an, er, awful poo coin. [Twitter, archive]

The Athletic UK on Sportsbet.io is out at last. Why do English Premier League football clubs have ads for crypto betting? The market is Chinese gamblers, who love their Premier League, and also love betting on it. With quotes from me. [The Athletic UK, free with login]

Craig Wright is at it again with his copyright claim on the Bitcoin white paper — the High Court has given him permission to file a claim against Cøbra, who runs bitcoin.org, for putting the white paper on the site. This is despite the paper having been part of the original Bitcoin code release under the MIT License. [press release, PDF]

Survey: coiners smell and have no friends. 60% of crypto users say crypto has affected their social relationships; I’m presuming the other 40% are forever alone in the basement with their red and green candles. [Bloomberg Wealth]

 

 



Become a Patron!

Your subscriptions keep this site going. Sign up today!

2 Comments on “News: Bitcoin mining is not green, miners versus programmers, gold is cleaner than bitcoin, exchanges collapse, how to forge an NFT”

  2. David and Amy, please get your book about Tether scam ready. Will be an international bestseller for sure. After Tether implosion, sell the movie screenplay rights of your book for the buckets of money you both so thoroughly deserve and never have to work for money again. I think the authors of Billion Dollar Whale sold their movie rights for well over 7-figures. Cheerio, Tim

    Reply

Leave a Reply

Your email address will not be published. Required fields are marked *

This site uses Akismet to reduce spam. Learn how your comment data is processed.