Bitcoin is a crypto-economic ecosystem that divides the world. Countries can be categorized as Bitcoin-friendly or anti-Bitcoin. Often, the news, in one way or another, takes headlines, and polarizes socio-economic agents and society at large.
In the anti-Bitcoin camp, there are cases such as that of China, Venezuela, or South Korea. Its anti-Bitcoin regulations have produced seismic waves throughout the cryptoeconomy. But the club is now adding a new member – the illegality of Bitcoin mining has reached the United States itself.
Bitcoin makes enemies (and friends) wherever it goes…
Those who frequent these lines already know about our crypto-enthusiasm, although this has not prevented us from warning about the Bitcoin bubble and other cryptocurrencies since the very beginning.
For example, we also already talked to you about how “Bitcoin is already too big to fail “for some economies, and that is why a black Bitcoin market will emerge in China.”
The recent crusade of the South Korean authorities against the cryptosystem in general, and against Bitcoin in particular, is also well known.
We have even allowed ourselves the (honorable) license to make an analysis of why Bitcoin’s regulation has not yet arrived, and about the reasons why the very Central Banks of the whole world are not entering the swampy terrain of regulation of the cryptoeconomy – as they should.
The cradle of capitalism, the United States, begins to question the legality of mining.
But now comes negative news for Bitcoin from the most influential country in terms of capitalist economy. We are talking about the very cradle of modern capitalism. After the precedent that supposed that the USA was to identify Bitcoin users, assuming the beginning of the end of the crypto-privacy, now it turns out that mining Bitcoin is already illegal in some places here in the United States.
In the state of New York, the city of Plattsburgh has unanimously imposed an 18-month moratorium on Bitcoin mining, which in practice has meant the first prohibition of criptomining on US soil. The reason was to prevent the miners from making massive use of the city’s cheap electricity.
The decision stems from complaints of the citizens for the recent increase in their light bills. This has risen between $100 and $200, which is a drastic increase for a city with electric prices among the cheapest in the country. This is possible thanks to the proximity of the St. Lawrence Dam and its hydroelectric power: the mining complexes there pay only 2 cents per KwH.
These low costs are intended to make the city attractive for economic activity, but they have also attracted industrial-scale cryptomining installations. Due to the weight that the energy consumption of the miners imposed, last January, the city had to go out to the free market to buy additional energy, which is was what caused that the prices shoot up.
In response to the legal moratorium, the miners have obviously positioned themselves against it, and as consideration, they are willing to assume the extra cost in the energy bill in the months when there is overconsumption.
In Brussels, they are aware of the energy problem, but they do not see a legal solution
With the current precedents, it is not surprising that the concern for the energy impact of Bitcoin mining and other cryptocurrencies has a global reach. In fact, in Europe they are very aware of this fact, but have stopped short of legislation.
In Brussels, cryptomining is not currently an illegal activity in the European Union, and therefore the Commission has not put in place any measure for its control. According to the statements of the Commissioner of Economy and Digital Society, Mariya Gabriel, while the energy consumed by this activity is produced in compliance with legal requirements, there is no legal basis to limit it, let alone prohibit it.
The fact is that the first and dramatic effects of the high electricity consumption of the Bitcoin ecosystem are emerging, as a result of its tremendous energy inefficiency. But these energy problems associated with Bitcoin should come as no suprise to our regular readers. A few months ago, we analyzed in the article “Bitcoin is an absolute energy (and environmental) disaster” how Bitcoin presents a galloping energy inefficiency.
This inefficiency is due to the design of the so-called “Proof of work” (PoW or “Proof-of-work”) of Bitcoin, and we have already proposed several alternatives to solve consumption that are totally avoidable without losing an iota of the most idealistic advances brought by cryptoeconomics. In addition, this unnecessary energy consumption implies, given the energy mix used by the main mining complexes, that the energy disaster is environmental as well.
However, the Bitcoin community does not assume the inescapable challenge of making Bitcoin an energy efficient alternative. And the main argument of some is that mining is economically profitable, but do not see that its profitability will remain there while the price of Bitcoin makes it worthwhile.
But we are not talking about profitability in that more short-term sense. We speak of pure and hard efficiency. And, as much as mining Bitcoin is economically profitable, throwing energy out the window does not make any sense, because it is totally avoidable. Now we can see that it is not socio-economically sustainable either, since the impact of this inefficiency is already reaching even the citizens who, as in Plattsburgh, have to pay out of pocket for over-demand.
As always, Bitcoin must reinvent itself or die. If the bitcoi community is not able to agree to embrace energy efficiency, then do not complain when politicians react to the discomfort of ordinary citizens.
Because all inefficiency is bad per se, but if in addition to energy inefficiency we adversely affect the lives of others, then I am afraid that the more idealistic and decentralized principles of crypto economics would, and should, end up being questioned.