There have been a few days since I read the post from ssaurel, the post in question is this one No Matter How Green Bitcoin Is, the White House Will Denigrate It. While there are a few reasons for waiting to do a post on the topic myself, letting ssaurel´s post cycle out is one of them. Being very angry and not composed after reading the Whitehouse materials published is another.
Making Cryptominers Pay for Costs They Impose on Others
That is the name of the publication posted by the Whitehouse. And I would argue that even if you knew nothing about the official policy of the US government. Just reading the name would probably tell you, or at least give a hint of it. But is it that bad? I mean if we objectively look at the title, it actually does not say anything crazy. Well at least not in my eyes. I mean it is a standard that gets tried to be imposed on a lot of industries. Take the old type of mining. They are charged with paying for and making sure the area gets reclaimed after the mining is done. Sure the big greedy companies usually have a workaround, like filing for bankruptcy just as the income stops and the bill comes. Probably several other ways to make sure the taxpayers are left holding the bill as well. Just I don't happen to know about them. But at least the same spirit is applied to that type of mining.
Can it really be something like that that has gotten me all worked out? Let us take a look at the document in question and see what it is it says. The link to it can be found here, or at the bottom of the post.
Right off the bat, we find a proposal for a new law. This would require "Firms engaged in digital asset mining would be required to report the amount and type of electricity used as well as the value of that electricity, if purchased externally". Really not sure what they mean by type, but probably AC/DC or maybe the voltage? Or if it is a legal way of saying clean or dirty? But overall they would need to report the amount and type they use. This power then would get a sweet addition of a 30% tax added on top.
The reason given for this tax is similar to what I covered in my previous post, The Whitehouse just commented on Crypto, go green or else..., on this topic. And my answers to it are still the same. Stop imposing a bubble standard on Cryptomining. I think that covers the proposed tax. If you want to read more about the tax proposal in its entirety. There is a link to the official PDF down below. You find the proposal on page 71 of the document or page 78 of the PDF. Let us read on.
Currently, cryptomining firms do not have to pay for the full cost they impose on others, in the form of local environmental pollution, higher energy prices, and the impacts of increased greenhouse gas emissions on the climate. The DAME tax encourages firms to start taking better account of the harms they impose on society.
After reading this, and not knowing any better, one would think that cryptomining is a very similar thing to let us say running a huge oil pipeline through a Nativ American reserve. This against the will of the Native Americans, of course. Calling it "safe" despite having data that supports that these pipelines tend to leak or worse. Or perhaps knowing the environmental impact our industry has, only to bury that research and start lobbying and paying politicians to say the opposite. Or perhaps burying a lot of toxic waste instead of properly taking care of it. Or some other really heinous act against humanity. But I digress.
Yes, cryptominers are all responsible for these things. Rueing the environment, the poor quality of life, and the failure of the US electrical grid. Cryptominers also specifically generates pollution that they use to pollute low-income neighborhoods and community of color. Exactly how they found out about the cryptominer plans I don't know, we must have some internal leaks in our secret cabal. I mean even I pack up my pollution generated from mining, back when I mined. And sent it to the US, specifically to those types of neighborhoods. I bet the FB and I will come to raid me any second. Got to put my miners into the microwave.
I mean you have to be well into sipping that cool-aid to be able to post this and keep a straight face at the same time. But if even I as a non US citizen know about the historical housing policy that has been policy in the past in the US, among other crap. Trying to pass off the blame for the current housing situation on cryptomining is just, well I am at a loss for words is how stupid it is.
But at least the pollution that gets pumped out from all the oil and coal power plants in the US can be blamed on cryptomining right? Because when power is generated in these powerplants from non-cryptomining industries they make sure the pollution do not fall anyway near low-income housing and community of color. Wait, what's that? The pollution doesn't change, it keeps going to the same place. Are you sure? Ok, ok. You're sure.
But what about all the new oil and coal power plants that have been built to support the cryptominers, they have been built to target those groups specifically, right, right? What's that, no new unclean powerplants built by cryptominers. But what about the Kemper County energy facility in Mississippi. That was the last unclean powerplant built, it was started back in 2010, surly that was by crypt... No, ok. It was not even finished. Ok. So what you're saying is that all unclean energy was already there, to begin with. And cryptominers are only using it as any other company or private person would. Ok.
Cryptominers can actually be good for the environment
As a bit of a sidenote I thought I would put forth these arguments that I have come across. The first one is that cryptominers can actually be used to harness the energy that would go to "waste" in other cases. There is a problem with renewable energy sources like wind and solar. And that is they do not always generate the same amount of energy. This means that production can not always match demand. Well unless there is overproduction and storage of the energy. But the storage part has yet to be worked out and implemented in a large enough and widely used manner. This means that there can be a large amount of energy being produced and not used. Enter cryptominers. They can be set to mine and use this energy. Using what would otherwise be lost.
The second argument is that cryptominer as an industry actually is pretty unique compared to the absolute vast majority of other companies. By that, I mean if we take a look at the cost of a cryptomining company. There are two running costs, well three to be picky. There is Rent, and there is power consumption. The last one is wages for the supporting staff. But it would be comparably small for a really large mining company. The only other cost they have would be buying miners. And that is a fixed cost.
If we take a look at these costs we see that the only one that a cryptominer really can impact, to a large extent anyway, is the cost of electricity. The easiest way to impact this would be to invest in their own power production. That would be solar most likely, but to some extent, wind could also be an option I assume. And as far as I know, they are nice in this. Not that producing power would save them money, but compared to other industries they have far more options and variables to play with regarding saving money and increasing their profits.
Cryptominers have a very large incentive to "go green" or start producing their own renewable energy. And the reasons extend beyond just cost savings. Energy Security is another reason, but more on that later. The last reason is environmental sustainability reason. Or the go green or go home as I like to call it. With all the pressure from politicians and the media that alone would be a very large incentive to start producing renewable energy.
Back to the business
Back to the excerpt above. Increases risk to the local electrical power grids. If it were not for the overall bad state already of the US electrical grid, I would perhaps consider this an argument. Oh and if it were not for it being completely stupid. The electrical grid was not built to be used? Then why was it built one would ask themself. To provide a charming addition to the scenery? While I actually like power. and telephone cables. I am willing to bet that most people, in this regard also, are not like me. And they actually do not like them.
Is there perhaps some other reason they do not want people or companies to use the power grid? Well, would you look at that? As if by magic a video appears. And by the look of things the electrical grid is in desperate need of repairs and expansion. Because virtually no maintenance has been done on it since it was built. And how bad are things? They are so bad that metal hooks are getting worn through causing electrical failures and fires, one of which killed 84 people a few years back. And in case you wonder how long it would take to wear through a hook used to hold up cables on one of those large power poles takes, it is just about 100 years. That is how long the power grid has been left unattended.
To then have the gall to suggest that cryptominers should stop using electricity because it is taxing for the power grid. If you build something and then just leave it to rot away without any maintenance for roughly 100 years. I would argue there are more pressing needs to take care of. Like repairing and expanding the power grid. Also, I do not hear any other voices being raised for other industries to cut back or stop using the power grid. That seems a little strange, right?
Time to move the goalpost
As I said above, cryptominers are in a pretty unique position that incentivizes them to produce and/or use green energy. I for one think that it is great, but definitely, there can be done more here. One of the things governments as an example can do, not just in the US, is to shift the money that is going to subsidize the unclean energy producers and oil, gas, and coal companies to support the green energy sector. Subsidize the equipment needed to start producing green energy like solar panels. I bet if that is done then probably the majority of the cryptominers would opt for that solution.
What's that, the crane truck is backing in. They waved some papers from the Whitehouse about moving the goal post? In the case that you might not be familiar with what I am referring to, regarding "moving the goal post". It is a tactic that gets used ever so often in all different sorts of manners. In this case, for the longest time, there have been complaints about cryptominers being unclean and not using renewable or green energy. But when they do, suddenly that is not enough anymore, there is now a new goal further away. And the complaining starts all over again but with the new goal instead of the old goal.
And the above is an excellent example of that "even when miners use existing clean power. ... increased electricity consumption by cryptominers reduces the amount of clean power available for other uses". Now suddenly the discussion is no longer about cryptominers not using clean energy. Now it is about if they actually do use clean energy, then there is no clean energy left for others to use. This is just utter nonsense, completely illogical, and just stupidity on another level.
This is what it is all about
Finally, we seem to get to what it is all really about. At least this is one of the first times I have seen it put so bluntly and concerted into writing in a formal document. Sure it has been implied before in what I have read. It is actually kind of refreshing to see for once. Well at least compared to the utter nonsense and stupidity of the other arguments put forth here and in other places.
Alongside these known costs and risks, cryptomining does not generate the local and national economic benefits typically associated with businesses using similar amounts of electricity. Instead, the energy is used to generate digital assets whose broader social benefits have yet to materialize
This is what it comes down to, the brass tax if you will. Money. For some reason, especially in the US but perhaps they are just more open about it, it always seems to come down to money. Cryptominers do not generate enough money. Or at least they do not spend the money if it is there, to grease the wheels in Washington.
Does that mean that cryptominers have no right to exist? I do not really follow the logic there. While I do think it is important that companies pay taxes where they operate. Saying that because cryptominers use a large amount of power and comparably do not provide the same economic benefits as other companies who consume a similar amount of electricity. I mean since when did electricity consumption become the defacto measuring stick?
After a little google-fu, I found this interesting list of companies and what they paid in tax in the US back in 2021. I wonder how these 19 Fortune 100 companies do on the new electricity measuring scale. At least if I look at their tax numbers I can say it is just baffling how they can get away with paying next to nothing. But I guess with their national economic gains being this low, or at a loss in some cases. The local economic benefits must be off the charts. That is probably why I can't really find them.
I guess the answer must be for cryptominers to employ more people? Because these big companies do not pay any, or very little tax. That obviously can not be the criteria for contribution. And using clean energy is obviously not the crux or argument we were led to believe it was. So cryptominers need to hire more people and just keep the salary cap the same. That way we would get a similar situation to how Amazon is doing things. Oh, I almost forgot, they really need to worsen the working conditions for the throng of people being employed as well.
Also, I wonder how many scandals can be linked to cryptominers there are compared to just these 19 companies. I will just leave that one here.
Crypto is useless?
The last thing I want to talk about is this little snippet; "the energy is used to generate digital assets whose broader social benefits have yet to materialize". What they are saying is that crypto promised the moon and deliver a night out looking at the stars on top of the garage roof.
Sure there can be a discussion about what, and how useful cryptocurrencies are. But the fact that they have a use case I think is beyond refuting at this point. If it is one that the governments like or think is a benefit to them, that is a completely different question. And probably the question that really needs to be talked about. But saying that crypto do not provide a way for people to empower themself in countries with rampant inflation as we see in South America in several cases. Ignoring that would be like the blind leading the blind I would argue, aka a situation not beneficial to anyone.
This is why crypto adoption is higher in countries where the people have incentive to adopt it. If we take a look at the top 20 countries regarding crypto adoption we will start to see a pattern. Vietnam, Philippines, Ukraine, India, United States, Pakistan, Brazil, Thailand, Russia, China, Nigeria, Turkey, Argentina, Morocco, Colombia, Nepal, United Kingdom, Ecuador, Kenya, and Indonesia. These are in the order of first to place 20. We can quickly see that there is a pattern emerging. One of countries that has far from the economic muscles that the US has.
This is for your benefit, we call it a "social benefit"
If crypto however is so useless as they like to imply. How come virtually every country, or at least 118 of them, currently are in some way, shape or form trying to make their own CBDC happen? I thought this whole blockchain thing was supposed to be crap and useless? The "social benefits have yet to materialize" as they put it. I am sure the CBDC´s will sort that out. They look very promising with regards to bringing a lot of social "benefits". Did I say benefits? Ops my bad, I meant a controlling surveillance state. Tomato potato as they say.
I would love to hear your opinion on all of this. Am I completely barking up the wrong tree and have misunderstood something? Or do you not agree with one of my arguments, if so please let me know what or how you think I am incorrect. Or perhaps you agree with me, or I missed some arguments. The comment section is open for you, I just ask that if there is any debate or discussion happening that you try and keep it civil. It is ok to have a difference in opinion, but it is not ok to be an a-hole about it.
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