Donate to Remove ads

Got a credit card? use our Credit Card & Finance Calculators

Thanks to johnstevens77,Bhoddhisatva,scotia,Anonymous,Cornytiv34, for Donating to support the site

Crypto Bubble

How to buy, profit and invest in crypto currencies or NFTs
Urbandreamer
Lemon Quarter
Posts: 3122
Joined: December 7th, 2016, 9:09 pm
Has thanked: 347 times
Been thanked: 1025 times

Re: Crypto Bubble

#456438

Postby Urbandreamer » November 8th, 2021, 7:30 am

DiamondEcho wrote:More seriously, have you travelled though Central America? As you know the idea of them pioneering a pukka new global currency is frankly beyond ridiculous.


I haven't been to Central America, nor have I been to Canada or Africa. I did install machine tools in China during the late 80's and early 90's when much of it was still very much a 3'ed world country, does that count?

I was not claiming that Bitcoin would become a new global currency when I questioned if El Salvador's experiment was "likely to be a dismal failure". I was suggesting many things.

It's claimed that more people there now have Bitcoin wallets than bank accounts. Not difficult when less than 30% of the population have bank accounts.
Do you know about M-Pesa? Why do you think that has been so successful? Sure M-Pesa is not a cryptocurrency, but arguably Bitcoin is acting as M-Pasa in El Salvador.
Here is a bit about M-Pesa.
https://telcoin.medium.com/banking-the- ... 3381b26836

I am also not claiming that I KNOW that this experiment will succeed. It is others who claim to know the outcome simply because it's a cryptocurrency or Bitcoin in particular.

Ps
Canada is growing Canabis to export and last year doubled it's quantity of the dried stuff exported. Does that make it a "narco-state right on the US's doorstep"?

1nvest
Lemon Quarter
Posts: 4328
Joined: May 31st, 2019, 7:55 pm
Has thanked: 681 times
Been thanked: 1316 times

Re: Crypto Bubble

#460203

Postby 1nvest » November 22nd, 2021, 10:51 pm

Urbandreamer wrote:Bitcoin is contentious because it's not easy for the state to control. In the UK we used to have exchange controls and still have laws about moving gold in or out of the country. Those controls would be problematic to apply to bitcoin transactions.

Other than pre-declaration or otherwise potentially having it confiscated as smuggling/proceeds of illicit activities, I'm not familiar with UK laws about moving gold in/out of the country, do you have a reference?

The alternative to physically moving physical gold in/out is to liquidate, electronically transfer the cash, repurchase at the desired target destination. I guess in that sense bitcoin could instead be the medium of exchange/transfer when it was desired to leave a low footprint. As such I see a primary target of bitcoin transparency/audit-trail. Counter-parties breaking the law to accept/deal/pay in bitcoins without a verified audit trail as to which individual(s) made the exchange/deal. When so, and when the price does stabilise, it will be just another regulated currency and likely one of relatively low value.

Urbandreamer
Lemon Quarter
Posts: 3122
Joined: December 7th, 2016, 9:09 pm
Has thanked: 347 times
Been thanked: 1025 times

Re: Crypto Bubble

#460223

Postby Urbandreamer » November 23rd, 2021, 6:40 am

1nvest wrote:Other than pre-declaration or otherwise potentially having it confiscated as smuggling/proceeds of illicit activities, I'm not familiar with UK laws about moving gold in/out of the country, do you have a reference?


https://www.gov.uk/guidance/gold-acquis ... tice-70121

1nvest
Lemon Quarter
Posts: 4328
Joined: May 31st, 2019, 7:55 pm
Has thanked: 681 times
Been thanked: 1316 times

Re: Crypto Bubble

#461022

Postby 1nvest » November 26th, 2021, 8:14 am

Urbandreamer wrote:
1nvest wrote:Other than pre-declaration or otherwise potentially having it confiscated as smuggling/proceeds of illicit activities, I'm not familiar with UK laws about moving gold in/out of the country, do you have a reference?


https://www.gov.uk/guidance/gold-acquis ... tice-70121

Thanks. Obvious really, similar to any other goods/products i.e. restrictions can apply on the amounts and whether traceable (receipts) and how much value is being conveyed.

I wonder whether valuation might in the case of legal tender be the currency or commodity value, 1000 gold sovereigns of legal tender £1 each or gold value of around 320 times (at recent price levels) that? Same for gifts (I gifted Mr John Wick £1000 in UK legal tender coins, versus I gifted £320,000 in gold sovereign coins). I suspect legally it would be whichever were the higher value of the two.

DiamondEcho
Lemon Quarter
Posts: 3131
Joined: November 4th, 2016, 3:39 pm
Has thanked: 3060 times
Been thanked: 554 times

Re: Crypto Bubble

#465371

Postby DiamondEcho » December 12th, 2021, 9:22 pm

1nvest wrote:Thanks. Obvious really, similar to any other goods/products i.e. restrictions can apply on the amounts and whether traceable (receipts) and how much value is being conveyed.
I wonder whether valuation might in the case of legal tender be the currency or commodity value, 1000 gold sovereigns of legal tender £1 each or gold value of around 320 times (at recent price levels) that? Same for gifts (I gifted Mr John Wick £1000 in UK legal tender coins, versus I gifted £320,000 in gold sovereign coins). I suspect legally it would be whichever were the higher value of the two.


I '''suspect''' if you try taking 8Kg of gold, receipts or not, through UK customs then you'd be in for a highly interesting (well, long in retrospect anyway :D ) conversation :lol:

--- based upon a parallel though smaller non pre-disclosed cash sum brought in entirely legally, earned and carried, some years ago...
Mr Heathrow Customs: 'So, Mr X, what is the reason and source of this (essentially my years entire gross salary you bastard) in this little undeclared ziplock bag you're carrying today.... that made all our X-ray machines sound alarms? Huh?"

Hallucigenia
Lemon Quarter
Posts: 2621
Joined: November 5th, 2016, 3:03 am
Has thanked: 166 times
Been thanked: 1718 times

Re: Crypto Bubble

#469737

Postby Hallucigenia » January 2nd, 2022, 4:38 pm

Digiconomist has stats for Bitcoin in 2021, based on their Bitcoin Energy Consumption Index :

https://digiconomist.net/bitcoin-histor ... rformance/

Mining consumed 134TWh of electricity, up 89% which if it was a country would put it 27th in the world, ahead of Sweden. For comparison the UK consumed 330TWh in 2020.

Total mining revenue was $16.6bn, up 247% and the gross margin on mining rose from 26% to 60%, although in December it had fallen back to 40%.

Transactions were down 14%, at an average fee of $9.90 (up from $1.34 the previous year) and 1.386MWh per transaction. At $50/MWh that works out at $69.30 of energy per transaction, or look at it another way, one transaction is the energy equivalent of someone flying London-Geneva and back.

Urbandreamer
Lemon Quarter
Posts: 3122
Joined: December 7th, 2016, 9:09 pm
Has thanked: 347 times
Been thanked: 1025 times

Re: Crypto Bubble

#469784

Postby Urbandreamer » January 2nd, 2022, 8:28 pm

Hallucigenia wrote:Transactions were down 14%, at an average fee of $9.90 (up from $1.34 the previous year) and 1.386MWh per transaction. At $50/MWh that works out at $69.30 of energy per transaction, or look at it another way, one transaction is the energy equivalent of someone flying London-Geneva and back.


Energy consumption is a deliberate feature of bitcoin. The idea is to make the cost of attacking the ledger large. Or to put it another way, it's cheaper for those who mine and keep the ledger to behave. This is due to the "proof of work" which was (as I understand) first suggested as a means to reduce email spam. If it COST some significant amount to send emails then there would be a cost to bad actors in sending spam.

https://www.investopedia.com/terms/p/proof-work.asp

Of course this is only needed in a trust less, decentralised system that anyone can be part of. Systems like the Swift payment system have a restricted number of actors and hence transactions can be blocked. Be it support for democracy activists in Hong Kong or communist dictators who have a thing about rockets.

As for transaction times, the Swift network takes over a week rather than about 10 minutes, though people don't use it every day.
https://www.keycurrency.co.uk/SWIFT-transfer/

Lightning sits on top of the Bitcoin blockchain and is far faster. This is the protocol used with the wallets in El Salvador, though there are concerns about the Chivo wallet and the governments central BTC fund. The protocol is NOT trust less, but relies on trusted channels. This makes it cheap in energy and very quick. The idea is that large amounts of transactions are consolidated before being put "on chain" or recorded in the bitcoin block-chain, somewhat like our banks do to transfer money between banks in a batch process (Bac's 3-4 days).

The subject of energy consumption is however NOT as simple as digiconomist like to suggest though. Energy consumption and production have to be balanced. Traditionally this is done by supply side control. When the adverts happen in the soap opera and everyone puts the kettle on a fast acting gas turbine spins up to generate the energy. Demand side control has long been debated. When the kettle's go on, rather than fire up a generator, turn off the fridges and car chargers. NOT POPULAR! No not popular at all. However reducing the number of mining rigs running is another option. Minors might be happy with cheap energy when it's abundant, and expensive when it's not.

Speaking with SVT, Vattenfall’s Head of Physical Power Management, Henrik Juhlin, said that crypto mining represents an ideal way to balance the load on electric grids, particularly when the power supply varies. This is the case in Sweden and other countries which rely on renewable energy sources like wind and solar for a significant portion of their energy.

https://cryptonews.com/news/major-swedi ... se-ban.htm

JohnB
Lemon Quarter
Posts: 2497
Joined: January 15th, 2017, 9:20 am
Has thanked: 677 times
Been thanked: 997 times

Re: Crypto Bubble

#469786

Postby JohnB » January 2nd, 2022, 8:41 pm

While mining server farms can ramp very quickly to absorb excess power, they could equally well compute protein folds, render movies or do SETI searches, we are not short of science to be done. Each of those has scientific, social or commercial value, but the good profits from bitcoin mining have squeezed them out, and in some cases set them back, as the GPUs were in short supply. And if you connect the farms to a thermal storage system you can use the waste heat too.

Lootman
The full Lemon
Posts: 18685
Joined: November 4th, 2016, 3:58 pm
Has thanked: 628 times
Been thanked: 6564 times

Re: Crypto Bubble

#469791

Postby Lootman » January 2nd, 2022, 9:05 pm

JohnB wrote:While mining server farms can ramp very quickly to absorb excess power, they could equally well compute protein folds, render movies or do SETI searches, we are not short of science to be done. Each of those has scientific, social or commercial value, but the good profits from bitcoin mining have squeezed them out, and in some cases set them back, as the GPUs were in short supply. And if you connect the farms to a thermal storage system you can use the waste heat too.

Pure speculation on my part but the two biggest publicly traded crypto miners (as far as I know) are Riot Blockchain (RIOT) and Marathon Digital Holdings (MARA).

RIOT has 8 employees and MARA has 3 employees! I imagine all 11 of them are filthy rich given that the market caps of each are a few billion despite being down 50% to 70% in recent months.

Presumably their main expense is energy. Which might explain why they are located in Boulder, CO and Las Vegas, NV - both locations with cheap hydro power, courtesy of dams on the Colorado River?

Urbandreamer
Lemon Quarter
Posts: 3122
Joined: December 7th, 2016, 9:09 pm
Has thanked: 347 times
Been thanked: 1025 times

Re: Crypto Bubble

#469793

Postby Urbandreamer » January 2nd, 2022, 9:36 pm

JohnB wrote:While mining server farms can ramp very quickly to absorb excess power, they could equally well compute protein folds, render movies or do SETI searches, we are not short of science to be done. Each of those has scientific, social or commercial value, but the good profits from bitcoin mining have squeezed them out, and in some cases set them back, as the GPUs were in short supply. And if you connect the farms to a thermal storage system you can use the waste heat too.


Hi JohnB. Good to hear from you again. Just one very minor correction. Nobody uses GPU's for mining Bitcoin any more, unless they are willing to finance it as a hobby. They just are not cost effective. As we have said, energy costs are an issue and ASIC's are just so much more efficient.

GPU's are used to mine the likes of Ethereum, which uses proof of stake rather than proof of work.

It's a very minor correction. The only reason that I make it is to show how fast things are changing. What was true three years ago no longer is.

I mentioned lightning and El Salvador, the lightning network didn't exist 3 years ago, no country had adopted Bitcoin and no McDonalds would accept Bitcoin for a Big Mac. I'm interested to see what the next 3 years shall hold.

There are other providers and I know it is something that you would never consider, but compass mining will rent of sell rigs on multiple continents.
One of their big problems is securing energy. They had a serious problem with a site in south Carolina, but they learned.
You might be interested in this article.
https://www.coindesk.com/business/2021/ ... r-digital/
Compass will power the new Canadian facility with 95% clean energy.

.

Lanark
Lemon Quarter
Posts: 1321
Joined: March 27th, 2017, 11:41 am
Has thanked: 595 times
Been thanked: 582 times

Re: Crypto Bubble

#469797

Postby Lanark » January 2nd, 2022, 10:02 pm


JohnB
Lemon Quarter
Posts: 2497
Joined: January 15th, 2017, 9:20 am
Has thanked: 677 times
Been thanked: 997 times

Re: Crypto Bubble

#469820

Postby JohnB » January 3rd, 2022, 12:59 am

Lootman wrote:Presumably their main expense is energy. Which might explain why they are located in Boulder, CO and Las Vegas, NV - both locations with cheap hydro power, courtesy of dams on the Colorado River?


Boulder, CO is a high-tech hub, I lived there for 2 years. It has no hydro power, but I did visit the coal-fired power station once...

the fact that its ASICs rather than GPUs doesn't really change my argument, you could fabricate custom protein folding chips and use excess power for them. Of course you can mine with renewable power, its just that power could be used for other things, and either more films would be rendered, or less gas would be burnt in power stations near Hollywood. There is a world renewable power shortage, no site is so remote it can only be used for mining.

And those movie studios struggled to get hard disks last year, because a different cryptocurrency required "proof of lots of disk space" for its mining activities, and outbid everyone else.

Urbandreamer
Lemon Quarter
Posts: 3122
Joined: December 7th, 2016, 9:09 pm
Has thanked: 347 times
Been thanked: 1025 times

Re: Crypto Bubble

#469834

Postby Urbandreamer » January 3rd, 2022, 8:37 am

JohnB wrote:There is a world renewable power shortage, no site is so remote it can only be used for mining.


I know that this thread is about crypto and in particular if there is a bubble, but since the subject of energy keeps cropping up we possibly should consider it. I'd also like to apologise for the length of this post. Ignore it, unless you are interested in energy supply.

I hope that it's obvious, but energy doesn't get from A to B at zero cost. Remote villages/cities or remote generators either need cross country tunnels or steel towers linked by copper or aluminium wire to move electricity if it isn't local. The more energy used/produced, the more metal needed. There are also losses due to resistive heating in the wires. Pipe lines move gas from Siberia to the UK to generate electricity here, because it's cheaper than moving the electricity.

There is in fact little shortage of renewable power resources, though there is of ones used. You tend to need higher amounts of capital to access them and in some cases few would choose to live close. The obvious example is the amount of solar energy that impacts arid deserts. Why don't we have a huge solar farm in the Sahara? The solar panels would be no more expensive than those used for a field in the UK, but would harvest more electricity due to the angle of the sun. It has been suggested in the past, but shipping the energy to people who would use it is not without costs or issues.

Likewise geothermal energy. We see it around the ring of fire, bubbling up to the surface. How much is used? How many choose to live close to an active volcano. El Salvador has 23 volcanos 6 of which are active and it does use them. According to Wiki (2006), for 12% of it's electricity. Could it be that consumption is not near the volcanos?

Is there really a world wide shortage of rain, sun, wind, tide, wave, heat from the centre of the earth?

Does anyone else really believe that the wind doesn't blow in the centre of an ocean or that there are not uninhabitable locations so remote that it wouldn't be cost effective to move power from them?

The cost of wind turbines and solar panels has been dropping for as long as I have known about them (mass production), the same is not true of the metal used in the wires to move electricity from A to B.

Non of this post so far is about crypto or Bitcoin mining. It simply point's out that there is no shortage of renewable energy, that may not be economical as an energy supply for people.

Moving on to energy management. To regulate a grid you need to bring generators/consumers on and off line to regulate the supply. Some of us remember rolling blackouts in the UK and I have seen them in China. It's CRUDE.

If we want to reduce our CO2 emissions by reducing fossil fuel used for electricity then we need more Hydro dams (possible, but limited) or accept an oversupply and investigate more clever demand side management. Bitcoin mining could play a part in the latter as could electric cars, with a change in their domestic chargers.

JohnB
Lemon Quarter
Posts: 2497
Joined: January 15th, 2017, 9:20 am
Has thanked: 677 times
Been thanked: 997 times

Re: Crypto Bubble

#469846

Postby JohnB » January 3rd, 2022, 9:30 am

You are ignoring my point that if there is spare energy available anywhere for computers, they can do much more useful tasks than mining bitcoin. Fabs can work on other things, rare metals used in different circuit boards.

Fundamentally bitcoin is a very expensive currency to run, you can't get away from the ludicrous £ cost per transaction its design imposes because its coupled to exponentially rising power consumption.

While its a bubble energy demand will continue to rise when we want it to fall. Once the bubble pops people will wonder they are using bitcoin and not a rival. I'm not against crytocurrencies in general, just the ones that require high usage of resources.

TheMotorcycleBoy
Lemon Quarter
Posts: 3245
Joined: March 7th, 2018, 8:14 pm
Has thanked: 2222 times
Been thanked: 587 times

Re: Crypto Bubble

#469937

Postby TheMotorcycleBoy » January 3rd, 2022, 2:34 pm

JohnB wrote:You are ignoring my point that if there is spare energy available anywhere for computers, they can do much more useful tasks than mining bitcoin. Fabs can work on other things, rare metals used in different circuit boards.

Clearly the capitalist marketplace is more interested in mining BTC. I can't help but feel amused that many on TLF are far keener on dissing BTC, because shock horror, is uses a lot of energy, than attempting to understand why so many are pushing up the price of the coins [1].

While its a bubble energy demand will continue to rise when we want it to fall. Once the bubble pops people will wonder they are using bitcoin and not a rival. I'm not against crytocurrencies in general, just the ones that require high usage of resources.

Bubble? BTCs been around for over 12 years. Lets do a quick comparison with something else, hmm..., the Tulip bulb Bubble:

Image

Note that the whole thing was over and done with in 6 months. And now the BTC/$ price over 10 years. Note several peaks, also the similarity of the chart to that of several tech/growth/startup stocks.

Image

No comparison, IMHO.

[1] Loss of faith in the dollar? Fiat money?

Matt

Aegis
Posts: 24
Joined: December 10th, 2021, 9:34 pm
Has thanked: 2 times
Been thanked: 22 times

Re: Crypto Bubble

#469977

Postby Aegis » January 3rd, 2022, 4:55 pm

The difference is that with a startup you expect to see price increases as it becomes more likely to generate revenues in future, changing the risk of the share and therefore the risk/return profile. With something like bitcoin, the token doesn't change, meaning the anticipated future value should stay unchanged if the asset is acting rationally. After all, there's nothing I can do with a bitcoin purchased in 2010 that I can't do with one purchased yesterday, and the assets themselves haven't changed.

Overall I can't see any reason for this being anything other than a bubble. The price is entirely dictated by expectation of future growth rather than any increase in underlying or intrinsic value. As such it's no different to me than investing in collectables, and the difference between something being popular and not is a very fine line. It's not for me.

TheMotorcycleBoy
Lemon Quarter
Posts: 3245
Joined: March 7th, 2018, 8:14 pm
Has thanked: 2222 times
Been thanked: 587 times

Re: Crypto Bubble

#469982

Postby TheMotorcycleBoy » January 3rd, 2022, 5:15 pm

Aegis wrote:The difference is that with a startup you expect to see price increases as it becomes more likely to generate revenues in future, changing the risk of the share and therefore the risk/return profile.

I was merely making a comparison with appearance of the chart, not the fundamentals.

Matt

Aegis
Posts: 24
Joined: December 10th, 2021, 9:34 pm
Has thanked: 2 times
Been thanked: 22 times

Re: Crypto Bubble

#469989

Postby Aegis » January 3rd, 2022, 5:33 pm

TheMotorcycleBoy wrote:
Aegis wrote:The difference is that with a startup you expect to see price increases as it becomes more likely to generate revenues in future, changing the risk of the share and therefore the risk/return profile.

I was merely making a comparison with appearance of the chart, not the fundamentals.

Matt


Fair enough, can't disagree that they look similar.

Urbandreamer
Lemon Quarter
Posts: 3122
Joined: December 7th, 2016, 9:09 pm
Has thanked: 347 times
Been thanked: 1025 times

Re: Crypto Bubble

#470021

Postby Urbandreamer » January 3rd, 2022, 7:20 pm

Aegis wrote: After all, there's nothing I can do with a bitcoin purchased in 2010 that I can't do with one purchased yesterday, and the assets themselves haven't changed.

Overall I can't see any reason for this being anything other than a bubble. The price is entirely dictated by expectation of future growth rather than any increase in underlying or intrinsic value. As such it's no different to me than investing in collectables, and the difference between something being popular and not is a very fine line. It's not for me.


While we can disagree about increasing trade in bitcoin, many would agree that there is little* intrinsic reason for bitcoin to increase in "value", unlike shares in a startup or other company. Of course, as Matt pointed out, many currencies decrease in value. If we are to compare it's price to something decreasing in value then possibly we should expect it to increase in price, though not necessarily in value.

I confess that fact is one of the things that causes my interest in bitcoin, though there are other things that appeal to me.

*I say little, but were everyone to desire to hold bitcoin rather than state currencies this would lead to an increase in demand and the sort of astronomical increase in price that would happen if gold was chosen instead. Again, please note that I use the word "price", though value might be more appropriate if we talk about desire to own. Yes gold has a small intrinsic "value", but almost throughout history it's "value" has related to desire to own it rather than to use it for it material properties.

bungeejumper
Lemon Half
Posts: 8066
Joined: November 8th, 2016, 2:30 pm
Has thanked: 2847 times
Been thanked: 3939 times

Re: Crypto Bubble

#471144

Postby bungeejumper » January 7th, 2022, 2:36 pm

Well here's a bit of synchronicity. I just looked up the dollar price of bitcoin, and Google came up with a figure of $41,771.

And on this day in 2021, it was... $41,771.

Of course, it's been above $68,000 in the meantime. Early November 2021, in fact. But hey, what's a 39% unrealised loss between friends? ;)

So is that hodling or hobbling?

BJ


Return to “Crypto and NFTs”

Who is online

Users browsing this forum: No registered users and 0 guests