News: Everybody hates Chia, Defi100 rugpull, China versus mining, China versus crypto

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Chia petard

This blog lives on Hetzner Cloud. I was already a happy customer, and now I’m an even happier one — Hetzner’s told crypto miners and Chia farmers to just bugger off. [Twitter; Twitter] Rough translation:

Yes, it’s true, we have extended the terms and conditions and banned crypto mining. We have received many orders for our servers with large hard drives. However, large storage servers are increasingly being rented for this [mining]. This leads to problems with bandwidth on the storage systems. With Chia mining, there is also the problem that the hard drives are extremely stressed by the many read and write cycles, and will break.

The aggrieved replies from never-customers are the usual coinerism. Particular points to the guy who thought that renting something meant he had the absolute right to thrash it to death.

Meanwhile, I’m told that bids for bulk storage on Hetzner are already over three times what they were just a few months ago. [Twitter]

To “farm” Chia, you plot and save as many bingo cards as you can. The system calls a number; if you have the right bingo card, you win. You compete by holding petabytes of bingo cards, and writing more as fast as possible. Holding the bingo cards triples the price of large hard disks, and writing the bingo cards burns out an SSD in six weeks instead of ten years.

Chia was known to be ridiculous in 2018, because it was stupidly obvious that Amazon Web Services would beat all comers at masses of raw storage space. [DSHR, 2018]

In 2021, Amazon Web Services beats all comers at masses of storage space. So AWS China had, for a short time, a page offering to rent you space for Chia farming. The enterprising marketer responsible for this suggested using an “i3.2xlarge” high-I/O server (8 CPUs, 61GB RAM, 10Gbit networking) with a 1.9 TB SSD for plotting, and bulk storage on S3 to store your completed plots. They also gave basic set-up instructions for Chia farming. The page disappeared in short order — but an archive exists. [The Block; AWS, archive, in Chinese; CoinDesk]

Bram Cohen, the inventor of Chia, is striking back at the “fashionable fud” that Chia trashes hard drives! He starts a Twitter thread by saying that the claim is false — though by the end of the thread, he admits it’s true. But it’s your own fault for using consumer SSDs, because the rule in crypto is always to blame the user. [Twitter thread]

Never mind that the Chia FAQ still tells people they can farm Chia on a desktop computer (likely SSD), laptop (likely SSD) or a mobile phone. [Chia, archive]

Decentralisation by “proof of X” will always be an engine of pointless destruction. It’s pointless because decentralisation always recentralises — because centralisation is more financially efficient.

“Decentralisation” only exists as a legal construct — “can’t sue me bro” — and not at all as a functional description. Bitcoin mining is completely centralised. Ethereum mining is completely centralised, and the network has a hard dependency on Consensys. Chia was launched centralised, because Chia Network recruited large crypto mining companies before launch.

“Decentralisation” is chasing a phantom.

There is not a country’s worth of CO2 value in “decentralisation” as a legal construct. Saying that you can see hypothetical value in “decentralisation” is a grossly insufficient excuse for the destruction it observably results in.

Update: my piece on Chia for Foreign policy is just out!

 

 

Q. What do you call unsmokeable mushrooms?
A. Non-Tokeable Fungi

NFTs are the same grift as ICO tokens, altcoins and Bitcoin before them: invent a new form of magic bean, sell it for actual money. Frequently the same grifters, too.

If anyone ever tells you NFTs are new:

In 1962, the French neo-avant-garde artist Yves Klein began dealing in what he declared to be Zones of Immaterial Pictorial Sensibility. In exchange for a sum of solid gold, Klein would imbue a patch of thin air with his artistic aura and provide a receipt. One such “zone” was bequeathed to the Los Angeles County Museum of Art where it exists only as a photograph of the transaction, taken as the receipt was set ablaze and half the gold tossed into the Seine. [Guardian]

There’s more detail on musician Imogen Heap’s planned NFT collection. She’s going to use a ton of electricity, and pump out kilograms of carbon dioxide, to … buy carbon credits. [DeZeen]

The article says “This helped to remove a total of 20 tonnes of carbon dioxide from the atmosphere.” This is true only for redefinitions of “remove” that are so weasely, you’d think they were on a blockchain.

Carbon credits don’t remove a damn thing, and it’s a lie to claim they do. It’s a bad excuse for doing a bad thing that shouldn’t be done in the first place. [Greenpeace]

Dapper Labs has been sued by Rosen Law Firm on behalf of plaintiff Jeeun Friel and others, alleging that NBA Top Shot Moments are unregistered securites. Dapper issued Top Shots, Dapper runs the marketplace, Dapper controls everything about the market, and the company is notoriously slow at giving people their payouts. CoinDesk has the complaint. [CoinDesk]

Dominic Cummings, the Poundshop Rasputin at the heart of British politics for most of 2019 and 2020, is offering to do an NFT of documents he has to submit to a Parliamentary committee. I’m honestly surprised he wasn’t deep in crypto already, and editing past blog posts to say how he gave Satoshi the idea for BitGold. [FT, paywalled]

Newsy: NFT art auctions have a piracy problem. Includes bits from me. [WPTV; YouTube]

Metakovan’s B.20 token scheme sold shares in a pile of Beeple NFTs, including the $69 million JPEG. It’s not going well so far. [Artnet]

(“Non-Tokeable Fungi” joke courtesy Ingvar Mattson Daniel Dern.) [File 770]

 

 

It has been [0] days since the last DeFi rugpull

Defi100 is a decentralised finance protocol running on the Binance Smart Chain — a private permissioned Ethereum instance run by popular crypto casino Binance to attract DeFi to a blockchain that isn’t clogged to uselessness, the way the main Ethereum public chain is.

Today, we are all Defi100, as the site puts up an important customer service message: “WE SCAMMED YOU GUYS AND YOU CANT DO S—T ABOUT IT  HA HA. All you moon bois have been scammed and you cant do s—t about it.” A heartwarming step up from just changing the site to the word “penis.” They took $32 million in users’ cryptos with them. [Defi100, archive]

Reddit users on /r/defi100 warned about the protocol previously — “They are either a scam, or they are completely incompetent” — but the subreddit moderator took care to remove it. The subreddit has seen no posts in the past two months — or none that were left up, at least. [Twitter; Reddit]

DeFi lender BlockFi has self-rugpulled. In BlockFi’s March promotion, the company ran a giveaway where they would give customers a few dollars’ bonus for sufficient trading volumes — but accidentally gave them a few bitcoins’ worth instead. BlockFi reversed the transactions, but sent legal threats to customers who had already withdrawn the bonus. You don’t get that sort of customer service for free. [CoinDesk]

 

 

Bitcoin in the enterprise

The Health Service Executive in Ireland has been ransomwared. [CNBC; RTE] The same attack hit Tusla, the Irish child and family agency, whose systems are linked to the HSE’s. [RTE]

Toshiba Tec, meanwhile, refuses to accept that crypto is the future of payments! The Toshiba subsidiary told Dark Side, the ransomware gang that shut down Colonial Pipeline, to just bugger off. [CNBC]

Luddites in hospitals in Waikato, New Zealand also refuse to embrace Bitcoin as a payment platform — they won’t be paying the ransomware either. [Stuff]

Insurer AXA halts new policies to reimburse ransomware payments in France — because the authorities told them to stop directly motivating ransomware. [ABC News]

How a CyberNews reporter applied for a job with a ransomware gang. [CyberNews]

Sophos has published its 2021 report on the state of ransomware. [Sophos]

 

 

I heard it on the blockchain

Good news for Ethereum in the enterprise — it’s evolved beyond the capabilities of Microsoft Azure! Azure Blockchain as a Service (BaaS) is shutting down in September 2021. It apparently still has any customers; they’ve been invited to move to Consensys. [ZDNet; Microsoft]

Is Blockchain Ready for the Enterprise? LOL, no. The bit on the Decentralized Identifiers standard is hilarious — they wrote the standard, but fobbed the hard bit off onto another standards committee. [blog post]

Enterprise blockchain was always a proxy for the price of Bitcoin. It was a way of saying “Bitcoin” without touching a Bitcoin. This was cool when number was going up in 2017, and not so cool when it wasn’t.

Not a single one of these projects ever had a use case. Not a single one, ever, did any job better than existing technologies, rather than worse.

“Smart contracts” are far less impressive when you realise they’re literally just “database triggers” or “stored procedures,” and that there are excellent reasons we try not to write code right there in the database in actual enterprise computing.

 

 

Baby’s on fire

China has announced, yet again, that it’s kicking out the crypto miners — to “crack down on Bitcoin mining and trading behavior, and resolutely prevent the transmission of individual risks to the social field,” according to the Financial Stability and Development Committee of China’s State Council. The People’s Bank of China hates crypto a whole lot, and the Chinese government’s been trying to push the crypto miners out since 2018 — but perhaps they’ll make it stick this time. [Twitter; Reuters]

Inner Mongolia has set up a hotline to report suspected crypto mining. This is the sort of regulation the world needs. Inner Mongolia has been told by Beijing to cut its CO2 production considerably, and they’d rather use their quota for steel and similar useful things. [Twitter; Sixth Tone; FT, paywalled]

I am told that miners are calling around trying to get the hell out of China ASAP. Mining facilities are set up in containers to be moved around quickly, so this isn’t hard. The hard part is that Bitcoin now uses as much electricity as the Netherlands. Where do you put a medium-sized country’s worth of electricity usage at short notice?

Bitcoin is green, hypothetically! In real life, here’s a gas-powered plant that restarted just to mine bitcoins. [Architect’s Newspaper, archive]

The state of New York is suggesting banning bitcoin mining — new operations would be frozen, pending environmental review. [CoinDesk]

Bankers have heard bitcoiners’ concerns about all the energy banks use — the Bank of Italy notes specifically that the Target Instant Payment Settlement (TIPS) system uses one 40,000th the energy of Bitcoin. [Bank of Italy] The European Central Bank describes Bitcoin’s “exorbitant carbon footprint” as “grounds for concern.” [ECB]

The Financial Times has a detailed writeup of Bitcoin’s dirty energy problem. [FT, paywalled]

NiceHash suspends all withdrawals due to a “security incident”. Funds are safe, I’m sure. [NiceHash]

The Wyoming Blockchain grifters are at it again. David Dodson says: burn electricity for Wyoming’s prosperity! He quotes me saying “Bitcoin is literally anti-efficient,” but he puts this forward as a point in its favour. If coiners understood externalities, they wouldn’t be coiners. At least he spelt Attack of the 50 Foot Blockchain  right. [WyoFile]

 

 

Lie dream of a casino soul

Crypto exchanges are already forbidden in China. So instead they run “over the counter” desks, matching buyers and sellers, which is different because, uh, reasons. There’s a fresh rumour that China is closing down, or has closed down, Okex and Huobi’s OTC desks. Chinese USDT holders are also rumoured to be dumping their tethers.

In probably-related news, China has also placed even tighter restrictions on dealing in cryptos for actual money. [Reuters]

Turkey has put crypto exchanges under MASAK, its financial regulator. The exchanges are daunted at the work required not to be incompetent money-laundering chop shops. Turkey needed to put in the new rules to follow FATF guidance on virtual asset service providers, but having not one but two exchanges messily implode just recently was probably quite motivating. [Resmî Gazete, PDF, in Turkish; Decrypt; Reuters]

Thailand mandates improved customer service for crypto traders! In-person ID checks will now be required to get a new account at an exchange. [Bangkok Post]

The IRS’ plans to subpoena the Kraken crypto exchange about its users have been approved by the court. [Department of Justice]

The IRS and the Department of Justice are just seeking information from Binance Holdings Ltd, you understand. Binance has not, as yet, been specifically accused of wrongdoing. [Bloomberg]

The US Treasury has called for crypto transfers of value greater than $10,000 to be reported to the IRS. [Bloomberg]

 

 

Things happen

You can browse in absolute privacy on the Tor network! Except that last year, one in four Tor exit nodes was compromised — the attackers were replacing Bitcoin addresses in Bitcoin mixer web pages with the attackers’ address. The attacker group is stil at it — last year they had 23% of nodes, this year they have 27%. [The Record]

Two years after SingularDTV shut down Breaker Mag, the site archive has finally rugpulled — all article URLs give “404 not found” or just don’t load. I’m pretty sure most of it is on the Internet Archive. [Breaker, archive of 12 May 2021]

The suit in which Dave Kleiman’s estate is suing Craig Wright over the bitcoins that Wright claimed he mined with Kleiman is finally going to trial, starting on 1 November 2021. [Order, PDF]

Goldman Sachs has finally reopened a very limited crypto trading desk, apparently due to client demand. The desk is dealing only in futures and non-deliverable trades. It has executed at least two trades. [FT, paywalled]

Institutional investors speak on Bitcoin! “Our stance with clients is the 10-foot pole rule: stay away from it.” [FT, paywalled]

The People’s Bank of China has run another DC/EP trial in Shehzhen, and the users respond! With a resounding “meh.” Again. It still offers nothing to end-users over Alipay or WeChatPay, as they already found in Shenzhen in November 2020. [Bloomberg]

Robinhood appears to procure its Dogecoin from Binance, for what that’s worth. [Twitter]

Is there anything Bitcoin can’t do? in Knoxville, Tennessee, a user applies Bitcoin to marriage counselling — and it’s transparent and cryptographically verifiable! Specifically, Nelson Paul Replogle paid a hitman in Bitcoin to kill his wife, and the FBI traced the transaction through Coinbase to his IP. Repogle is now facing murder-for-hire charges. [WATE TV, archive]

Bitcoins only get you out of divorce settlements if you never spend them: “Courts have the power to re-open divorce settlements years afterwards if non-disclosure can be proven; if you find out five years down the line that your ex has made a big purchase from unknown funds, it may be possible to re-open a previous divorce settlement.” [FT, paywalled]

 

 

Hot takes

Frances Coppola on Tether’s smoke and mirrors: “It’s not reserves we should be worrying about, it’s capital. And the total lack of transparency.” [blog post]

Charlie Munger and Warren Buffett are not fans of Bitcoin. “I don’t welcome a currency that’s so useful to kidnappers and extortionists and so forth, nor do I like just shuffling out of your extra billions of billions of dollars to somebody who just invented a new financial product out of thin air. I think I should say modestly that the whole damn development is disgusting and contrary to the interests of civilization.” [CNBC]

 

 

Living on video

Expert on Facebook’s Latest Digital Currency Attempt — me on NTD, in my capacity as the guy who literally wrote the book on Libra. [NTD]

I spoke to Radio Free Asia about the Bitcoin crash. The Google translation is usable. [Radio Free Asia, translation]

The Daily Mail quotes me, accurately, on Bitcoin’s environmental impact. [Daily Mail, archive]

Libra Shrugged, reviewed by Bill Ryan: Battling Megaliths: Facebook and the American Government Battle Over Digital Currency and the Future of Money. [Medium]

This Harry & Paul sketch from 2010 is not about crypto and Tether, except it totally is: [YouTube]

 

 

 

 

 

 

 

 



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4 Comments on “News: Everybody hates Chia, Defi100 rugpull, China versus mining, China versus crypto”

  1. In exchange for a sum of solid gold, Klein would imbue a patch of thin air with his artistic aura and provide a receipt.

    For everyone who thought Michael Craig-Martin’s An Oak Tree was too tangible.

  2. Original source (or, at least, where I saw it) was on File770, attributed to Daniel Dern.

    But, as you were writing about NFTs at the time, it was imperative to pass it on.

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