The Big Ideas

by Malcolm Riddell

Bitcoin’s growing energy problem: ‘It’s a dirty currency'

Financial Times

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June 24, 2021
Bitcoin’s growing energy problem: ‘It’s a dirty currency'
Bitcoin’s growing energy problem: ‘It’s a dirty currency'
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BIG IDEA | “Bitcoin alone consumes as much electricity as a medium-sized European country.”

‘ “Bitcoin alone consumes as much electricity as a medium-sized European country,” says Professor Brian Lucey at Trinity College Dublin. “This is a stunning amount of electricity. It’s a dirty business. It’s a dirty currency.” ’

  • ‘At the upper limit, bitcoin’s electricity consumption would be about 500TWh a year.’
  • ‘The UK consumes 300TWh.’

‘About 65 per cent of the crypto mining comes from China, where coal makes up around 60 per cent of the energy mix.’

  • ‘A slice of the mining in China comes from clean hydroelectric power, including with machines that are transported from the north to the south of the country on trucks each year in the wet season.’
  • ‘That hydro power is not necessarily diverted from anywhere else; some of these power stations were founded for factories that no longer exist.’

‘Energy consumption on some scale is a feature, not a bug, of bitcoin — a digital currency launched by the pseudonymous Satoshi Nakamoto 12 years ago.’

  • ‘Its detachment from the global financial and governmental system — still the most alluring feature for users seeking anonymity or wishing to bypass central banks — means it needs a new way to establish trust and security.’

‘It does this by awarding miners coins in return for intensive puzzle-solving on the blockchain, making it a so-called “proof of work” coin.’

  • ‘The puzzles are sufficiently hard to prevent hackers and other nefarious actors from taking control of the network, and the faster that miners can submit random numbers into the bitcoin algorithm, the more likely they are to unlock the coins.’

‘This all demands powerful machines running at full tilt.’

  • ‘Luckily for bitcoin miners with access to cheap energy and efficient machines, it is usually worth it.’
  • ‘The price of bitcoin has dropped by about $30,000 apiece since the peak last month, but it has climbed by more than 200 per cent since late 2020 and more than 1,000 per cent since 2019.’

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Malcolm Riddell
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'Are you tired of losing yet, America?'

As I write this, Taliban forces have entered Kabul and are reportedly occupying the Presidential Palace.
8/15/2021

Bloomberg

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'China Signals More Regulation for Businesses in Coming Years'

‘The State Council’s statement provides a guiding context to interpret current regulatory thrusts. The blueprint as an attempt by Chinese authorities to help investors understand the motives behind the regulatory push.’
8/15/2021

The Wall Street Journal

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George Soros
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'Xi’s Dictatorship Threatens the Chinese State'

‘Mr. Xi is determined to bring the creators of wealth under the control of the one-party state.’
8/15/2021

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Malcolm Riddell
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Don't Say Xi Jinping Didn't Warn You

‘Global investors are shocked to have discovered that China is run by Communists.’
8/5/2021

Bloomberg

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Matthew Brooker | Bloomberg
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‘Global investors shocked to have discovered that China is run by Communists.’

‘Global investors are shocked to have discovered that China is run by Communists.’
8/5/2021

Bloomberg

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'Shocked Investors Scour Xi’s Old Speeches to Find Next Target'

‘While China’s policy moves can feel ad hoc particularly to foreign investors, the changes are quite targeted on certain sectors.’
8/5/2021

The Wall Street Journal

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Greg Ip | The Wall Street Journal
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'China Wants Manufacturing—Not the Internet—to Lead the Economy'

‘Social media, e-commerce and other consumer internet companies are nice to have. But in his view national greatness doesn’t depend on having the world’s finest group chats or ride-sharing.’
8/5/2021

Bloomberg

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'China Plans to Exempt H.K. IPOs From Cybersecurity Reviews'

‘China plans to exempt companies going public in Hong Kong from first seeking the approval of the country’s cybersecurity regulator, removing one hurdle for businesses that list in the Asian financial hub instead of the U.S.’
7/18/2021

The Wall Street Journal

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The Editorial Board | The Wall Street Journal
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'Biden’s Warning on Hong Kong'

‘The pretense of Chinese and Hong Kong authorities is that their crackdown on the rule of law and dissent will have no effect on Hong Kong’s viability as an international center for trade and finance.’
7/18/2021

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Malcolm Riddell
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Why the U.S. Lacks Leverage over China

During the celebration of the Chinese Communist Party’s Centennial celebration, Mr. Xi stood in the same place on the balcony facing Tiananmen Square where Mao Zedong stood when he announced the founding of the PRC; Mr. Xi wore a gray Mao suit, among a sea of blue western suits; and he centered himself right above the portrait of Mao, who is similarly attired.
7/18/2021

Foreign Affairs

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Kurt Tong | Asia Group
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Hong Kong and the Limits of Decoupling

‘The United States’ inability to make China regret—much less reverse—its transgressions in Hong Kong suggests that financial separation, sanctions, and economic barriers are less reliable tools than many in Washington believe.’
7/18/2021

Nikkei Asia

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'I will aim for Mao's Status.'

‘There on the gate was Xi Jinping, Chinese president and party general secretary, in a gray Mao suit. Just below his feet was the portrait of Mao Zedong, also dressed in a gray Mao suit.’
7/18/2021

Financial Times

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'US warns companies of risk of doing business in Hong Kong'

“In the face of Beijing’s decisions over the past year that have stifled the democratic aspirations of people in Hong Kong, we are taking action,” said Antony Blinken, US secretary of state. “Today we send a clear message that the US resolutely stands with Hong Kongers.”
7/18/2021

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Malcolm Riddell
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The Chinese Point of View

Here are a few of my thoughts on the importance of Wang Jisi’s ‘The Plot Against China.’ Yuen Yuen Ang’s ‘The Evolution of Chinese Corruption’ speaks for itself - but note especially how Mr. Xi's anti-corruption campaign could hurt China's economy. I have now lived long enough that when a friend complains about his or her spouse, I say to myself, ‘There are no doubt two sides to this story.’
7/4/2021

Foreign Affairs

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Wang Jisi | President of the Institute of International and Strategic Studies at Peking University
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'How Beijing Sees U.S.-China Relations'

‘In Chinese eyes, the most significant threat to China’s sovereignty and national security has long been U.S. interference in its internal affairs aimed at changing the country’s political system and undermining the CCP.’
7/4/2021

Foreign Affairs

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Yuen Yuen Ang | University of Michigan
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'How Corruption Powers China's Economy'

‘China has managed to sustain four decades of economic growth despite levels of corruption that even Xi has described as “grave” and “shocking.” Why does it seem to have bucked the trend?’
7/4/2021

Harvard Magazine

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Ed Steinfeld | Brown University
Tony Saich
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Harvard Kennedy School of Government
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'From Rebel to Ruler': Tony Saich on Chinese Communism at 100

‘At so many points during its century-long existence, the CCP appeared to be in its death throes, whether as a result of external attack or self-inflicted internal strife.’
7/1/2021