El Salvador Plans to Use Electricity Generated from Volcanoes to Mine Bitcoin • Hacker News Board

Re: El Salvador Plans to Use Electricity Generated from Volcanoes to Mine Bitcoin

#261

Post by Growling_owl » Fri, Jun 11, 2021, 9:08 PM UTC

rawtxapp wrote: post #144

fnord123 wrote: post #136

Earlier quoted context omitted.

> Mandating BTC as legal tender is an awesome move. To me the most important benefit is that the 70% of the population which was excluded from banking and relegated to use physical currency will now be included. If the economy is an engine and money is the oil, El Salvador, which had only some drops of oil, will now get a complete oil change with synthetic on top of that. You are 100% incorrect. Bitcoin is wildly def…

> You are 100% incorrect. Bitcoin is wildly deflationary. Therefore it does not encourage an economy to function, it encourages people to hold onto it with white knuckles. It's not oil for the economy, it's sand. In my opinion, that's the biggest lie that people have been made to believe to justify constant stealing of their purchasing power over time. People will always spend money for things they need, they will al…

> People will always spend money for things they need, they will also spend money for things they want, our current system is forcing them to spend it for the sake of spending it causing unnecessary over-consumerism.

The worrying aspect is that the one thing that people want more than anything is to be the most rich and relevant person in a given area, hence the inflationary system to avoid people hoarding in order to reach this goal of theirs.

If you transition to an deflationary system and people fall in love with it....well there is a whole lot of room to go on the downside.

First people start giving up vacations, then dinners, then cars, that Netflix subscription, then the smartphone purchase, then the app purchase.. all in the name of hoarding.

Pretty soon the entire economy becomes a giant game of mental posturing to see who can go the distance without spending.

Paradoxically in this scenario the most rational thing to do is to spend like there is no tomorrow because society would be headed into chaos, so when the fecal matter hits the fan , at least you'll have good memories

Re: El Salvador Plans to Use Electricity Generated from Volcanoes to Mine Bitcoin

#262

Post by sanderjd » Fri, Jun 11, 2021, 9:15 PM UTC

defgeneric wrote: post #210

sanderjd wrote: post #149

Earlier quoted context omitted.

Even if crypto is a good solution for all this, bitcoin is a bad one.

I understand this argument, but if I had to choose right now which coin would be the best for my country, I would still go with Bitcoin. You don't get to choose which coin has the most backing, or the most diverse set of players from around the world.

But those are not important metrics for a legal tender currency. Bitcoin is a fine deflationary asset but a very bad currency.

Re: El Salvador Plans to Use Electricity Generated from Volcanoes to Mine Bitcoin

#263

Post by Dma54rhs » Fri, Jun 11, 2021, 9:17 PM UTC

bootlooped wrote: post #252

wyager wrote: post #147

Earlier quoted context omitted.

Bitcoin subsidizes the creation of constant-output power sources (geothermal, nuclear) which are not usually economical for highly variable consumer/industrial power usage. Long-term, these sources will probably power the grid during peak hours and power Bitcoin hardware during off-peak.

It also subsidizes the use of dirty power sources. The greenwashing of Proof of Work cryptocurrencies is insane. It's using the same amount of electricity as Argentina. https://www.vice.com/en/article/pkby7z/a-fossil-fuel-power-p...

PC gaming alone uses the same amount, there are many useless activities (well the both provide entertainment) that could be stopped if you want lower energy usage for the world. Ban gaming and obviously ban fashions since that is close to catastrophic catastrophe regarding greenhouse gasses.

Re: El Salvador Plans to Use Electricity Generated from Volcanoes to Mine Bitcoin

#264

Post by sanderjd » Fri, Jun 11, 2021, 9:19 PM UTC

charlesdm wrote: post #211

sanderjd wrote: post #149

Earlier quoted context omitted.

Even if crypto is a good solution for all this, bitcoin is a bad one.

Maybe. But it is better than the alternative? It's the quickest solution. Have a look at what happened when Venezuela ended up launching the Petro.

There are other possibilities between poorly executing a bespoke cryptocurrency and using bitcoin even though it's not a good currency. There are options that already exist which have low volatility, low transaction costs, and don't require injecting more and more energy for security. If those options don't seem mature enough (they do to me, but I dunno, maybe they're not), then a good option would be to wait.

Re: El Salvador Plans to Use Electricity Generated from Volcanoes to Mine Bitcoin

#265

Post by sanderjd » Fri, Jun 11, 2021, 9:24 PM UTC

deviantfero wrote: post #256

sanderjd wrote: post #191

Earlier quoted context omitted.

Excellent! Seems like they could go further if they have extra to use for asics running hashes.

there are storage and distribution limitations for producing even more energy, that's why surplus is sold to neighboring countries currently.

Is it a distribution problem? They can't build enough power cables, or they've already built them over as far an extent as is manageable? I can see how it's easier to just put a big data center on site, but it seems like it would be better to invest differently.

Re: El Salvador Plans to Use Electricity Generated from Volcanoes to Mine Bitcoin

#266

Post by rsj_hn » Fri, Jun 11, 2021, 9:27 PM UTC

pocoloco wrote: post #129

As a Salvadoran living abroad but keeping an eye on politics there, I feel the need to comment given the amount of skepticism shown here, which is understandable given the history. I believe that what the president, Nayib Bukele, and his team have done is monumental. The reason is that I also believe that the financial system crashed back in 2008 and has been kept alive by central banks worldwide. Last summer we saw…

> The thirst for USD around the world is increasing and all the so called printing by the FED is not getting to the other countries and international companies fast enough.

This is because all the Fed does is create reserves that it uses to purchase Treasuries on the open market. But when we talk of foreigners demanding USD, what they really demand are treasuries, thus more "printing" (it is electronic, reserves are just numbers in a database) actually reduces the supply of assets that foreigners want to hold. Of course the scale is not really relevant to make a big difference in either direction.

What would increase the supply of treasuries is more debt issuance. There is an insatiable thirst to hold risk free debt in stable jurisdictions where property rights are respected. That is why the U.S. can run enormous deficits every year and the yields on those deficits are negative in real terms. None of this has anything to do with the supply of Federal reserve liabilities, which are reserves, but with the supply of Treasury liabilities, both actual liabilities and the off-balance sheet stuff like mortgages which are federally insured and thus also risk-free. We live in a world where the globalization of capital means that the moment anyone has some money to save, they want to store it on account in some US Bank or as a US corporate bond or equity, as they don't trust their own local banks and their own local corporations. Thus the U.S. is the world's bank, and that's why there is a global demand for dollar-denominated assets independent of whatever the Federal reserve does to increase or decrease the supply of reserves within the US banking system. Adjusting those reserves with open market operations does absolutely nothing to supply more dollars to anyone in El Salvador (or in Kansas).

But the problem for El Salvador is not the technology of monetary systems, it is that El Salvador has an underground economy that prevents it from collecting taxes or having a working credit system. If all your dealings are under the table, you have nothing to show a loan officer. If you don't want to store your savings in a bank but want to instantly withdraw them and store them in a foreign bank or under your mattress, then you are not going to be able to get much in bank loans in your own currency. None of that will be solved or even improved with bitcoin. Proving once again that bitcoin is a solution in search of problem, even in the arena of El Salvador's monetary woes.

Re: El Salvador Plans to Use Electricity Generated from Volcanoes to Mine Bitcoin

#267

Post by sanderjd » Fri, Jun 11, 2021, 9:27 PM UTC

rawtxapp wrote: post #219

Shaanie wrote: post #200

Earlier quoted context omitted.

This "volatility will come down as the market cap gets larger" keeps getting thrown around, yet Bitcoin just lost 50% of its value at a market cap of 1 trillion USD. What market cap is required for Bitcoin to stop being volatile?

I mean even gold (which is a centuries old asset) is pretty volatile on a yearly basis (high of ~2100$, low of ~1650$ this year). I think when Bitcoin approaches Gold's price, you can expect similar volatility because by then large institutions/countries would be holding it. Also on a long term basis, it appreciates an average of ~300% year over year which is much better than the dollar which is depreciating on purpo…

Gold is also a very bad currency.

Re: El Salvador Plans to Use Electricity Generated from Volcanoes to Mine Bitcoin

#268

Post by geofft » Fri, Jun 11, 2021, 9:27 PM UTC

defgeneric wrote: post #202

geofft wrote: post #94

Earlier quoted context omitted.

Yes, but it undermines the point of energy production, because the energy produced is not going to existing consumers of energy, it's going to feed the insatiable-by-design blockchain. Imagine if there were a cryptocurrency based on proof-of-driving-things-between-cities with a mining reward, and Los Angeles invested in it. There would be an incredible incentive for expanding LA's highway infrastructure, and you'd ex…

That analogy would hold if the additional energy produced for bitcoin mining had some negative impact on the existing energy infrastructure. It doesn't. If anything it creates an incentive for making energy production more efficient. The fact that energy is produced and consumed is not bad in itself. The Sun could be said to be "wasting" energy by sending it off into space.

I'm not disputing that it creates an incentive for making energy production more efficient. It does! In the analogy I gave, there's definitely an incentive for building more highways ("There would be an incredible incentive for expanding LA's highway infrastructure") - it's just that this incentive is, at best, completely useless to existing commuters taking the highways.

I'm also not claiming that it's bad for energy to be produced and consumed. It's not! It's just irrelevant if you're looking to consume electricity, and someone else is producing and immediately consuming it. And it's bad for you as a consumer if production goes up and consumption goes up by even more.

I have no idea what your point is about the Sun.

Re: El Salvador Plans to Use Electricity Generated from Volcanoes to Mine Bitcoin

#269

Post by sanderjd » Fri, Jun 11, 2021, 9:29 PM UTC

megameter wrote: post #214

Shaanie wrote: post #200

Earlier quoted context omitted.

This "volatility will come down as the market cap gets larger" keeps getting thrown around, yet Bitcoin just lost 50% of its value at a market cap of 1 trillion USD. What market cap is required for Bitcoin to stop being volatile?

Well, how little volatility is needed to be called stable? Over a few years, large swings can happen with major forex pairs . Take GBP/USD for example: High of 1.71602 in 2014. Low of 1.14926 in 2020. It currently trades around 1.4. So, not the same kinds of returns and drawdowns as BTC/USD, but enough to make one's eyes water and stomach churn. Forex has always had a reputation for volatility.

I think it is more useful to look at inflation / deflation as the comparison point for a currency rather than forex pairs.

Re: El Salvador Plans to Use Electricity Generated from Volcanoes to Mine Bitcoin

#270

Post by neither_color » Fri, Jun 11, 2021, 9:29 PM UTC

pocoloco wrote: post #223

runbathtime wrote: post #221

The El Salvador government is directing a state run energy company to provide 'cheap' (does that mean free?) energy to those mining bitcoin in El Salvador. Are these miners even locals or are they Americans? The miners will be getting cheap energy at the expense of the local population/ country. Maybe the miner's profits will be taxed and go back to the government for a return on investment. The thermal energy from t…

> El Salvador receives millions of dollars in aid from the US. This has been true for decades. Not anymore. A couple of weeks back the US gov said that it would stop all USAID funding and give it instead to ONGs in El Salvador which are basically the opposition or anti-Bukele. I assume that there are other ways that the US gov sends "aid" but I'm sure these will also stop soon enough.

Wow this is the REAL story then. I had no idea why this move to BTC came out of nowhere and passed as law so quickly. Really scummy move from the US, using aid money to bully small countries and enforce its will. Too many strings come with US foreign “aid”, it’s more like predatory lending. I hope this works out for El Salvador.