Despite Bitcoin’s Dive, a Former Soviet Republic Is Still Betting Big on It(nytimes.com)
nytimes.com
Despite Bitcoin’s Dive, a Former Soviet Republic Is Still Betting Big on It
https://www.nytimes.com/2019/01/22/business/georgia-bitcoin-blockchain-bitfury.html
49 comments
I'd love to see a government experiment with having its central bank issue a dollar-backed stablecoin.
I mean, fundamentally the issue is that the rise in digital payments puts most of the money supply in bank ledgers... if the money supply was on a public ledger, individuals could still deposit it with a bank, but they could also send it peer-to-peer if they so chose.
I mean, fundamentally the issue is that the rise in digital payments puts most of the money supply in bank ledgers... if the money supply was on a public ledger, individuals could still deposit it with a bank, but they could also send it peer-to-peer if they so chose.
The loss of privacy in this case may not be worth using a public ledger.
In general though, I think it would be an interesting experiment if individuals can hold central bank money directly instead of going through commercial banks.
In general though, I think it would be an interesting experiment if individuals can hold central bank money directly instead of going through commercial banks.
I think there are plenty of ways that privacy could be regained... layer 1 settlements, use of an anonymous protocol like MimbleWimble, etc. It wouldn't necessarily need to be Bitcoin as it's implemented today.
But I agree... that experiment would be quite fascinating. It might not even be that big of a change... most people would probably continue to entrust a bank with their funds, and banks could potentially continue to operate a fractional reserve system.
But I agree... that experiment would be quite fascinating. It might not even be that big of a change... most people would probably continue to entrust a bank with their funds, and banks could potentially continue to operate a fractional reserve system.
>having its central bank issue a dollar-backed stablecoin.
Why not just issue dollars?
Why not just issue dollars?
I mean yes, you could just call them dollars. That was just to differentiate them from cash for the purposes of this discussion.
> Georgia provided land and cheap electricity so Bitfury, an American company, could set up a Bitcoin mining center in Tbilisi.
I hope they realize the digital currency doesn't necessarily "stay" in Georgia. Either way, the prime minister provided a loan out of his own investment fund, and it's been paid back. Not sure they are betting big on crypto, but they are using 10% of their electricity for it...
I hope they realize the digital currency doesn't necessarily "stay" in Georgia. Either way, the prime minister provided a loan out of his own investment fund, and it's been paid back. Not sure they are betting big on crypto, but they are using 10% of their electricity for it...
>The governing Georgian Dream party sold 45 acres for $1 for Bitfury to set up shop.
yes this looks like textbook corruption: the government just "gives" land and energy to cryptocurrenncy mining operations? seems very probably that not the government but those in government who set it up are getting crypto bribes in return...
yes this looks like textbook corruption: the government just "gives" land and energy to cryptocurrenncy mining operations? seems very probably that not the government but those in government who set it up are getting crypto bribes in return...
Happened all over the US last year. Lots of cities around me gave tax breaks and land to bring in “hundreds of tech jobs”... what we actually got was 12 jobs and jet engines cooling the servers stuffed in old buildings to the locals annoyance.
There was money to be made in crypto. But not by buying coin low and selling high.
There was money to be made in crypto. But not by buying coin low and selling high.
wow, I didn't know this was happening in US as well, are there any articles on the subject you can recommend?
See this N.Y. Times article focusing on Plattsburgh, NY:
https://www.nytimes.com/2018/09/19/nyregion/bitcoin-mining-n...
thats sad on so many levels of course, but least comprehensible at all is:
>With electricity so cheap that most residents use it to heat their homes, the city’s consumption exceeded its allocation on several days, Mr. Read explained. As a result, the Municipal Lighting Department had to purchase additional power at much higher prices — a cost it spread across its customers.
The machines are generating heat (and cryptocurrency) from electricity the locals were using to generate heat... At least they could have co-located the machines with the locals in a way that heat can be exchanged with inside and outside, and a meter measuring energy consumption when heat is directed inside...
The least wasteful form of mining is by replacing electric heaters with mining rigs, but that's not what happened here, it's more like going to the library to fetch some books because you ran out of toilet paper...
thanks for sharing the article
there's lots of similarities in this article with the Georgia one: besides the local economic depression, in both articles they also mention the local prison and the local casino...
>With electricity so cheap that most residents use it to heat their homes, the city’s consumption exceeded its allocation on several days, Mr. Read explained. As a result, the Municipal Lighting Department had to purchase additional power at much higher prices — a cost it spread across its customers.
The machines are generating heat (and cryptocurrency) from electricity the locals were using to generate heat... At least they could have co-located the machines with the locals in a way that heat can be exchanged with inside and outside, and a meter measuring energy consumption when heat is directed inside...
The least wasteful form of mining is by replacing electric heaters with mining rigs, but that's not what happened here, it's more like going to the library to fetch some books because you ran out of toilet paper...
thanks for sharing the article
there's lots of similarities in this article with the Georgia one: besides the local economic depression, in both articles they also mention the local prison and the local casino...
it's really a shame they're not even trying to be creative:
for example why not use the heat to pasteurize milk? co-locate the miners with the pasteurization plants
even better: desalinate water to steam, use the steam to heat the milk and the milk to cool the steam, now you have desalinated water AND pasteurized milk...
but oh no, that would actually create a job for a couple of people to work it out and change the plants and negotiate and discover similar opportunities...
for example why not use the heat to pasteurize milk? co-locate the miners with the pasteurization plants
even better: desalinate water to steam, use the steam to heat the milk and the milk to cool the steam, now you have desalinated water AND pasteurized milk...
but oh no, that would actually create a job for a couple of people to work it out and change the plants and negotiate and discover similar opportunities...
I remember an article where one local government, where power costs were very cheap, had to ban new bitcoin mining farms because they power draw was huge and the benefits gained by having them as an employer in the area were so small.
Dived since the last year, but price has been stagnant within 3000 - 4000 range for the few couple of months
Without knowing the absolute production capacity and utilization pre-Bitcoin / post-Bitcoin; that 10% isn't a very useful metric.
If Bitcoin is using locally underutilized electricity, I don't see anything wrong with this adventure.
If Bitcoin is using locally underutilized electricity, I don't see anything wrong with this adventure.
I have some friends who started working on interesting projects in the crypto space after Bitcoin 'died'. It seems to me there is still some potential for innovation in this area, as evidenced by the market sizing. Just need to cut some of the ICO/marketing cruft away and be realistic about its usecases.
Nice touch on referring to Georgia as a "former Soviet Republic". The article must have then described Bitfury as a company from a former British colony :)
All the former Soviet republics are commonly referred to as such in the western press.
Heck, the Former Yugoslav Republic Of Macedonia had that as its official name until very recently resolving the dispute with Greek irridentists.
Heck, the Former Yugoslav Republic Of Macedonia had that as its official name until very recently resolving the dispute with Greek irridentists.
Nitpicky, but the Macedonia naming situation isn't over yet.
Northern Macedonia was a proposal, but the referendum to adopt it failed to attract 50% of the voters. Unless I've missed some big news since then, FYROM is still its official name.
Regardless, it is a bad example since they are forced to use that name because of Greece. Other former Yugoslav Republics don't have such issues.
Northern Macedonia was a proposal, but the referendum to adopt it failed to attract 50% of the voters. Unless I've missed some big news since then, FYROM is still its official name.
Regardless, it is a bad example since they are forced to use that name because of Greece. Other former Yugoslav Republics don't have such issues.
Referring to Georgia as a "former Soviet Republic" is similar in tone to calling Ukraine "a historic part of Russia".
There were both what they've been called, sure, but given the current state of relationship between Russia and any of the two countries, it's like looking for trouble.
EDIT: what?
There were both what they've been called, sure, but given the current state of relationship between Russia and any of the two countries, it's like looking for trouble.
EDIT: what?
Ukraine is a historic part of Russia though. It never was a country on its own until 1992. And I say this as someone with Ukrainian heritage. My ancestors never immigrated from a country called Ukraine even though they were Ukrainian (or back then often called Ruthenian). It's just historic facts.
> It never was a country on its own until 1992
That's beside the point. Right now, there's a growing nationalist sentiment growing in Ukraine. If you go to Ukraine and shout this historical fact in the streets of, say, Kiyv, you might just encounter a group of people who violently disagree with the "underlying idea" (which you won't express, but they'll perceive) that Ukraine is Russia's bitch.
Imagine shouting about the Armenian genocide in Instanbul, or about the extermination and oppression of Native Americans in a major city in Texas.
Maybe not exactly, but you get the idea.
> My ancestors never immigrated from a country called Ukraine even though they were Ukrainian (or back then often called Ruthenian)
That kind of Ruthenian? [https://en.wikipedia.org/wiki/Kingdom_of_Galicia%E2%80%93Vol...]
Or that kind of Ruthenian? [https://en.wikipedia.org/wiki/Ruthenians_and_Ukrainians_in_C...]
Your ancestry might as well be "Polish with a mix of Lithuanian", 'cause who knows at this stage, no? Did you take a DNA test?
That's beside the point. Right now, there's a growing nationalist sentiment growing in Ukraine. If you go to Ukraine and shout this historical fact in the streets of, say, Kiyv, you might just encounter a group of people who violently disagree with the "underlying idea" (which you won't express, but they'll perceive) that Ukraine is Russia's bitch.
Imagine shouting about the Armenian genocide in Instanbul, or about the extermination and oppression of Native Americans in a major city in Texas.
Maybe not exactly, but you get the idea.
> My ancestors never immigrated from a country called Ukraine even though they were Ukrainian (or back then often called Ruthenian)
That kind of Ruthenian? [https://en.wikipedia.org/wiki/Kingdom_of_Galicia%E2%80%93Vol...]
Or that kind of Ruthenian? [https://en.wikipedia.org/wiki/Ruthenians_and_Ukrainians_in_C...]
Your ancestry might as well be "Polish with a mix of Lithuanian", 'cause who knows at this stage, no? Did you take a DNA test?
> Right now, there's a growing nationalist sentiment growing in Ukraine
Yes there is, but Ukrainian Neo-Nazis aren't exactly known for their understanding of history.
> Imagine shouting about the Armenian genocide in Instanbul, or about the extermination and oppression of Native Americans in a major city in Texas.
Except Ukrainians and Russians are the same people, and it's Germans and others who slaughtered them.
> Your ancestry might as well be "Polish with a mix of Lithuanian", 'cause who knows at this stage, no? Did you take a DNA test?
Maybe, it's a region that's had many conquests and we're all mixed to some degree. But my ancestors all spoke Ukrainian and were Orthodox, and Slavic culture has always been defined by culture, not necessarily ethnicity.
Yes there is, but Ukrainian Neo-Nazis aren't exactly known for their understanding of history.
> Imagine shouting about the Armenian genocide in Instanbul, or about the extermination and oppression of Native Americans in a major city in Texas.
Except Ukrainians and Russians are the same people, and it's Germans and others who slaughtered them.
> Your ancestry might as well be "Polish with a mix of Lithuanian", 'cause who knows at this stage, no? Did you take a DNA test?
Maybe, it's a region that's had many conquests and we're all mixed to some degree. But my ancestors all spoke Ukrainian and were Orthodox, and Slavic culture has always been defined by culture, not necessarily ethnicity.
> Except Ukrainians and Russians are the same people
I don't think that's for either of us to declare.
I'm at least quarter-Ukrainian from my father's side (I think my parental grandfather was Russian, but parental grandmother was certainly Ukrainian). You sound like you have much less than that in you. We're in no position to dictate who's one people and who aren't.
I do consider Ukrainians and Belarussians brotherly peoples, from my view as a Russian. I wish either of them no harm, and all the best, and hope that no major conflict arises between either of the three.
But they're going to be the ones to tell me what nation they are and what other traits they identify themselves with.
> and Slavic culture has always been defined by culture, not necessarily ethnicity.
I don't think Slavic culture – if there is, indeed, such a thing – defines itself with itself. It can't be its own description, see?
Aside from that... Don't you think there's this whole new massive issue of nationality that defines a people?
I don't think that's for either of us to declare.
I'm at least quarter-Ukrainian from my father's side (I think my parental grandfather was Russian, but parental grandmother was certainly Ukrainian). You sound like you have much less than that in you. We're in no position to dictate who's one people and who aren't.
I do consider Ukrainians and Belarussians brotherly peoples, from my view as a Russian. I wish either of them no harm, and all the best, and hope that no major conflict arises between either of the three.
But they're going to be the ones to tell me what nation they are and what other traits they identify themselves with.
> and Slavic culture has always been defined by culture, not necessarily ethnicity.
I don't think Slavic culture – if there is, indeed, such a thing – defines itself with itself. It can't be its own description, see?
Aside from that... Don't you think there's this whole new massive issue of nationality that defines a people?
> I don't think that's for either of us to declare.
Were the same people then? Historically there were few differences.
> You sound like you have much less than that in you.
Ethnically? Mother is 100% Ukrainian.
> I don't think Slavic culture – if there is, indeed, such a thing – defines itself with itself. It can't be its own description, see?
Historically, Slavs are defined by language and culture. Kind of like various Celtic groups. Just the way archaeologists and historians group them.
> Aside from that... Don't you think there's this whole new massive issue of nationality that defines a people?
Of course nationality matters now and to the future of a country. It's all that really matters. But people shouldn't try to rewrite history.
Were the same people then? Historically there were few differences.
> You sound like you have much less than that in you.
Ethnically? Mother is 100% Ukrainian.
> I don't think Slavic culture – if there is, indeed, such a thing – defines itself with itself. It can't be its own description, see?
Historically, Slavs are defined by language and culture. Kind of like various Celtic groups. Just the way archaeologists and historians group them.
> Aside from that... Don't you think there's this whole new massive issue of nationality that defines a people?
Of course nationality matters now and to the future of a country. It's all that really matters. But people shouldn't try to rewrite history.
we don't usually call Iraq the former Mesopotamian Kingdom
I was referring to the anti-Russian sentiment brewing in both countries. Russia has, after all, engaged in a military conflict with Georgia on behalf of South Ossetia in 2008. The two countries have been enemies since some time before that, and remain in hostility towards each other.
The big difference, of course, is that Mesopotamia is unlikely to commit crimes on foreign soil any time soon because you dismiss its territorial ambitions... unless I'm missing something everyone else gets here.
The big difference, of course, is that Mesopotamia is unlikely to commit crimes on foreign soil any time soon because you dismiss its territorial ambitions... unless I'm missing something everyone else gets here.
Meh, I wouldn't read too much into it. Depending on the country in question, I could easily imagine headlines about "one African dictatorship", "one South American country", "one Eastern European country". True that "former Soviet Republic" is not really relevant, but it's a common (cliched, even) phrase to use once you've decided you need need a descriptor.
Is Bitcoin diving again? I can never keep track.
Well, you know it's not shooting up, as HN isn't currently swarming with the Bitcoin zealots from Reddit.
Never seen a single positive word about Bitcoin on Hacker News, even when price was at its peak, so if it's true what you say they must have been doing a pretty bad job.
I've seen a lot of it. I can recognize it from a mile away, as I spend a lot of time on various crypto subreddits. (I was mining in 2011; I'm active there, under a different username with a different voice) Personally I think there's nothing wrong with what passes for typical discussion there: high optimism, but low substance. It just has no place on HN, and is downvoted accordingly. That's not a conspiracy against Bitcoin as much as a community standard here for what makes for substantive discussion.
Never is a very bold statement. However price spikes do tend to be met with negativity if they are discussed at all. A price spike is of no technological value so HN doesn't really worry about them (unlike say Reddit where it is the overwhelming topic).
No, it has been meandering around $3600 for a month or so (around the average electricity cost to mine one[1]). To put that in perspective, at that price the total value of all bitcoins that will ever exist is about $75 billion. That's close to the total value of Swiss Francs or Mexican Pesos in circulation[2], which still seems insane to me given that you probably can't even use it to buy lunch.
[1] https://www.marketwatch.com/story/heres-how-much-it-costs-to...
[2] https://en.wikipedia.org/wiki/Circulation_%28currency%29
[1] https://www.marketwatch.com/story/heres-how-much-it-costs-to...
[2] https://en.wikipedia.org/wiki/Circulation_%28currency%29
>No, it has been meandering around $3600 for a month or so (around the average electricity cost to mine one[1]).
I had wondered why that $3300-3600 mark seemed to be the bottom. That seems to be a fair explanation. It doesn’t seem good. I wonder; has the demand for gold ever been lower than the cost to mine it?
>which still seems insane to me given that you probably can't even use it to buy lunch.
Anyone still calling it a “currency” doesn’t seem to grasp what currency is supposed to be. Crypto-commodity is much more appropriate.
I had wondered why that $3300-3600 mark seemed to be the bottom. That seems to be a fair explanation. It doesn’t seem good. I wonder; has the demand for gold ever been lower than the cost to mine it?
>which still seems insane to me given that you probably can't even use it to buy lunch.
Anyone still calling it a “currency” doesn’t seem to grasp what currency is supposed to be. Crypto-commodity is much more appropriate.
> I wonder; has the demand for gold ever been lower than the cost to mine it?
It has definitely happened that mines were closed because of a decline in price:
https://www.cdfund.com/en/gold-mine-closures-due-to-current-...
It has definitely happened that mines were closed because of a decline in price:
https://www.cdfund.com/en/gold-mine-closures-due-to-current-...
The 'price of electricity to mine a bitcoin' is clickbait. There is no fixed price as it's 100% market/demand driven. The way bitcoin works is that the difficulty of the algorithm automatically adjusts to the rate at which they are being solved so that a block is able to be mined, on average, in about 10 minutes.
What this means is if there was a world where only one person was mining bitcoin using a single hand crank and a laptop for energy, it'd still take exactly as long as a world where there were trillions of people mining bitcoin using nuclear powered supercomputing complexes. So the amount of electricity required to produce one coin on average is 100% a reflection of demand.
The more demand there is for bitcoin (and the more miners), the more it costs to mine a BTC. It's quite a brilliant design since it scales endlessly with no change necessary to the underlying system. For instance imagine a bunch of people started spending $3600 of electric/compute time mining coins. Suddenly the increased number of people mining would mean that that level of compute would generate fewer coins - and so the necessary compute to produce a coin would naturally grow. By contrast, imagine the price of BTC went down and thus there was a decline in incentive and number of people mining it. Suddenly the price of electric required to produce one coin would also go down.
There are also some technical issues with things like the 'price of electricity to mine a BTC' such as the fact that the electric consumption per hash generated is going to vary quite dramatically depending on whether somebody is using a CPU, GPU, dedicated ASIC system, etc and then the specifics within those broad categories.
The old saying likely holds here: there are lies, damned lies, and statistics. People stating statistics like this are mostly just pushing an agenda. I do not mean the grandparent comment here. I mean the source he read it from. There are so many uncountable variables that just giving a number is completely meaningless, and highly misleading.
What this means is if there was a world where only one person was mining bitcoin using a single hand crank and a laptop for energy, it'd still take exactly as long as a world where there were trillions of people mining bitcoin using nuclear powered supercomputing complexes. So the amount of electricity required to produce one coin on average is 100% a reflection of demand.
The more demand there is for bitcoin (and the more miners), the more it costs to mine a BTC. It's quite a brilliant design since it scales endlessly with no change necessary to the underlying system. For instance imagine a bunch of people started spending $3600 of electric/compute time mining coins. Suddenly the increased number of people mining would mean that that level of compute would generate fewer coins - and so the necessary compute to produce a coin would naturally grow. By contrast, imagine the price of BTC went down and thus there was a decline in incentive and number of people mining it. Suddenly the price of electric required to produce one coin would also go down.
There are also some technical issues with things like the 'price of electricity to mine a BTC' such as the fact that the electric consumption per hash generated is going to vary quite dramatically depending on whether somebody is using a CPU, GPU, dedicated ASIC system, etc and then the specifics within those broad categories.
The old saying likely holds here: there are lies, damned lies, and statistics. People stating statistics like this are mostly just pushing an agenda. I do not mean the grandparent comment here. I mean the source he read it from. There are so many uncountable variables that just giving a number is completely meaningless, and highly misleading.
> That's close to the total value of Swiss Francs or Mexican Pesos in circulation
Physical currency in circulation. Almost every modern currency is principally held digitally.
Physical currency in circulation. Almost every modern currency is principally held digitally.
Value means nothing, sell 10% of bitcoins in one day and price will probably dive 100x
Sell 10% of stocks in a day and the price will dive 100x too.
Yes, that's why company total stock value and bitcoin value are both equal BS. It's just last sucker's price multiplied by total.
Anything nonlinear can't be measured like that.
A stock is still tied to a company that produces something. If 50% of Apple was sold tomorrow regardless of what happens to the stock price in the short term people know in the long term a new iPhone will be released in September and the company will still make money hand over fist. Bitcoin on the other hand only has value because of people buying or selling it.
>which still seems insane to me given that you probably can't even use it to buy lunch.
At the risk of being branded a "Bitcoin zealot from Reddit", I'd like to point out that although this may be locally true for any given reader since it's obviously dependent on where they live (which is also true of being able to buy lunch with US dollars by the way), it's certainly either ignorant or intellectually dishonest.
You can buy anything under $500 on aliexpress or amazon here[1], and that's only one of about half a dozen or so different websites I have bookmarked that accept various cryptocurrencies, operating either as currency conversion services or selling directly. The implication that you cannot spend bitcoin on real goods is not correct. If you don't live in mexico, it's much easier to spend $10 of bitcoin than $10 of pesos.
[1]http://olodolo.com/
At the risk of being branded a "Bitcoin zealot from Reddit", I'd like to point out that although this may be locally true for any given reader since it's obviously dependent on where they live (which is also true of being able to buy lunch with US dollars by the way), it's certainly either ignorant or intellectually dishonest.
You can buy anything under $500 on aliexpress or amazon here[1], and that's only one of about half a dozen or so different websites I have bookmarked that accept various cryptocurrencies, operating either as currency conversion services or selling directly. The implication that you cannot spend bitcoin on real goods is not correct. If you don't live in mexico, it's much easier to spend $10 of bitcoin than $10 of pesos.
[1]http://olodolo.com/
But no. Georgia is allowing an American company mine Bitcoin at scale. It uses a lot of power and a lot of infrastructure. But isn't a huge bet or anything interesting.