I wonder if cryptominers in poorer countries speed up the buildout of more stable and robust electricity networks in the long run? I understand they sometimes stress it too much in the short run such as here and then the regulators have to take action but the interplay on a longer timescale would be interesting to see.
You could say the same about whether bridges to nowhere generate important economic robustness. The problem with this view is it ignores that such activity crowds out the ability to do something actually useful with the same resources, while also producing all the same externalities (both positive and negative).
This point hinges on the assumption that bitcoin itself doesn't provide any benefit to humanity.
If its a useless speculative asset with no purpose other than as a ponzi scheme then yes, all energy used towards it is a huge waste and needs to be eradicated immediately.
If it has the potential to allow people to save their wealth under unstable regimes, as a long term hedge against inflation, as away of getting people to save more instead of spending every penny they have before it depreciates, to cause real wages to rise again, to encourage actual economic productivity rather than continually investing fake printed currency into an endless series of economic bubbles producing significantly more environmental damage than anything that could occur as a result of bitcoin mining.... then it is not waste.
You're talking about the broken window fallacy. I don't think it's immediately clear that a more robust and stable electricity network wouldn't lead to additional economical and societal benefits thus making it a positive sum game?
I don't think it's immediately clear that cryptomining leads to a more robust and stable electricity network for the people it outcompetes on power. The evidence of Kazakhstan certainly doesn't point in that direction...
I don't know the answer of course otherwise I wouldn't have posed the question but I guess asking questions qualifies for getting downvoted to -3. Some of you are clearly sitting on all the answers but you're not sharing them with the rest of us.
We see the short term results, my question was directed at the long term. I don't think it really matters if it's crypto mining or aluminum melters or any other energy intensive industry, it just happens to be crypto mining in Kazakhstan.
It just seems plausible since higher energy usage correlates with BNP. (I know, I know tax havens are exceptions to that rule.) If mining sticks around then this may turn out well for Kazakhstan, from an economical perspective.
What I mean by outcompeting is that if rich cryptominers are pricing poor Kazakhs out of an electricity supply which was perfectly fine before, I don't see how that counts as a win for their robustness and stability of power supply.
And PoW crypto isn't like aluminium smelting. The value of aluminium smelting isn't in winning an arms race with other aluminium smelters based on how much power they consume, so if you bring more power plants online at a lower-than-average price, market logic doesn't dictate that competing aluminium smelters should immediately seek to buy all that capacity until they've bid the price up to the original level.
The whole "crypto creates demand for innovation in power supply" only makes sense if you believe people haven't been investing in innovation in power supply because there's been barely anybody that wants cheap electricity for the past century or so! That might be the case for [formerly] tiny niches affected by new use cases, like say, lithium batteries suitable for powering vehicles. It isn't the case for Kazakh ability to keep the lights on
> What I mean by outcompeting is that if rich cryptominers are pricing poor Kazakhs out of an electricity supply which was perfectly fine before, I don't see how that counts as a win for their robustness and stability of power supply.
The article doesn't mention any of that though. It says that the miners got cut off (rationed) because 3 coal plants were offline. The regulator is stepping in to make sure regular people and industries are prioritized.
> The whole "crypto creates demand for innovation in power supply" only makes sense if you believe people haven't been investing in innovation in power supply because there's been barely anybody that wants cheap electricity for the past century or so! That might be the case for [formerly] tiny niches affected by new use cases, like say, lithium batteries suitable for powering vehicles. It isn't the case for Kazakh ability to keep the lights on
Investments and innovation follow demand so now that demand has risen and assuming demand stays high, what should we expect will happen? This is not unique to crypto, it just happens to be the driving force here. Of course other industries can lead to similar outcomes. If you think this will not lead to innovation and investments, you are basically saying that cryptomining deviates from the norm and you would need to justify this claim.
> The article doesn't mention any of that though. It says that the miners got cut off (rationed) because 3 coal plants were offline. The regulator is stepping in to make sure regular people and industries are prioritized.
The regulator has stepped in to ration to avoid cryptominers competing with the Kazakh poor for the electricity that is left over. That sounds like the power supply is less robust to me.
(A quick google suggests the power companies are claiming the shutdowns were scheduled but the recent demand spikes weren't part of the plan...)
> Investments and innovation follow demand so now that demand has risen and assuming demand stays high, what should we expect will happen? This is not unique to crypto, it just happens to be the driving force here. Of course other industries can lead to similar outcomes. If you think this will not lead to innovation and investments, you are basically saying that cryptomining deviates from the norm and you would need to justify this claim.
I'm not sure why you're pretending I haven't already observed what's different about POW cryptomining (unlike other industries which tend to increase yields by consuming less energy per unit of output than the competition, miners seeking block rewards maximise yields by consuming more energy, which means they are highly incentivised to consume all increases in energy output at a given price) or indeed why you are claiming that the norm is for increase in demand to result in something becoming cheaper and more widely available (it invariably has the opposite effect in the short term, and usually in the long run too) in an attempt to shift the burden of proof onto me, but doesn't exactly create the impression that you are arguing in good faith.
You are making assumptions about what I write, if something is unclear simply ask and I will try to clarify my argument. I am not saying the norm for an increase in demand is to result in something becoming cheaper and more widely available. I am saying demand spurs investment and innovation. I am saying that this could have beneficial effects such as a more stable and robust electricity net as well as other societal benefits, since this is what we usually observe when investments are made and innovation happens. This is not unique to crypto mining, hence why expecting something else to happen would be outside the norm.
But the uncensorable aspect also allows money transfer between organizations that we do want to censor, like terrorists or those who prey on children. So even that supposed benefit is largely nullified.
