“Bitcoin Must Die” Says Irish Blog Slugger O’Toole

Popular Irish blog Slugger O’Toole has delivered a stinging criticism of bitcoin, describing its mining protocol as an “obscenely wasteful” process that is contributing in no small way to an impending global climate catastrophe. In a scathing article published on October 12, the blog calls for the “death” of bitcoin.

“Environmental Disaster”

Referencing a recently released UN report that warns of an impending climate catastrophe requiring immediate mitigating action from global governments, the writer Andrew Gallagher argues that bitcoin and its underlying blockchain technology do not provide the same amount of contribution to the economy or to the environment.

According to Gallagher, while blockchain technology provides a genuine solution to nonfinancial real-world applications, the Proof-of-Work (PoW) mining protocol employed by the bitcoin blockchain dramatically increases global energy consumption and poses a threat to the environment. Going further, he criticises poW as an excessively wasteful protocol that consumes an enormous amount of power to put together what he calls “an infinite stream of mathematical garbage”.

In Gallagher’s opinion, the only advantage posed by bitcoin is its ease of implementation.

Proposing alternatives to PoW, the article then suggests the implementation of proof-of-stake algorithms, such as the dPoS system which ethereum is due to launch next year with its ‘Istanbul’ hard fork.

CryptoGlobe has previously reported that miners have moved in great numbers to Europe’s Scandinavian region which includes countries like Norway, Sweden and Iceland in search of cheap electricity made possible by the region’s excess geothermal power generation capacity and other renewable energy sources. It is unclear whether Gallagher factored this information into his bitcoin critique.

Expensive to Produce and Materially Unsustainable

The article further criticises bitcoin as too expensive to produce, in addition to containing no value at all outside of the bitcoin system, thus making it a unreliable store of value. Contrasting it with gold coinage and fiat currency, the article notes that even though gold is expensive to make, it provides an independent store of wealth, and even though fiat currency possesses no intrinsic value, its production cost is low, both of which bitcoin does not do.

Also mentioned is the fact that bitcoin does not obey the law of conservation of matter in the way that gold coinage and fiat currency do, which he argues makes it fundamentally more wasteful.

An excerpt from the article reads:

If you turn gold into a coin, the gold still exists. Resources have not been destroyed, just altered. If you turn paper into a banknote you spend some resources to get it printed, but many times less than its face value, and when the banking system collapses you can use the banknote for toilet paper – because that’s all it ever was. If you use electricity to solve a hashcash puzzle, the valuable (and polluting) ton of fuel that was burned to generate it is gone forever, yet the puzzle solution contains no value outside the Bitcoin system. It thereby combines the worst of both gold-backed and fiat currency.

Concluding its scathing assessment of bitcoin, the article states:

Bitcoin is made from ashes, and if ashes were legal tender, humanity would burn everything in sight and call it progress.

Chinese Yuan 'Inversely Correlated' with Bitcoin, Amidst US-China Trade Wars

Since January 2018, China and the US have been involved in an intense trade war in which both countries have significantly increased tariffs on imported goods and services.

Due partly to the rising tension between the two countries, the Chinese yuan (CNY) has been losing value against the USD. During the same time period, the price of bitcoin (BTC) and other major cryptoassets has been surging.

As noted by the South China Morning Post (SCMP), the value of BTC, the world’s most dominant cryptocurrency, increased by 26.5% to $7,878 during the time period from May 5 to May 17. Notably, US President Donald Trump had announced on May 5 that he would further increase tariffs on goods imported from mainland China.

Chinese Yuan Weakens as Nation’s Government Responds to Increased Tariffs

The SCMP pointed out that the yuan dropped to its lowest level since the past six months after the Chinese government responded to Trump administration’s decision to impose higher tariffs on China.

Commenting on the price fluctuations of both the yuan and bitcoin, Garrick Hileman, a Macroeconomics Researcher at London School of Economics (LSE) and Head of Research at Blockchain.com, remarked:

We are observing a strong inverse correlation between the [Renminbi] RMB’s value and bitcoin, meaning that recent RMB declines over trade tensions have been closely matched by increases in the value of bitcoin.

“Correlation Does Not Necessarily Equal Causation”

Hileman also mentioned that we “cannot be 100% certain” that the bitcoin price has been increasing due to heightened concerns regarding trade tensions and the corresponding decline in the value of the yuan. The blockchain researcher stated:

Trade tensions and declines in the RMB’s exchange rate as correlation does not necessarily equal causation.

Hileman, who earned his Phd from LSE, revealed:

This is not the first time we’ve seen significant increases in the value of bitcoin taking place alongside yuan concerns.

He added that there’s “growing recognition of bitcoin as ‘digital gold’ and it being used as a hedge against various macroeconomic risks.”

“This Year, the Narrative Is Bitcoin, Bitcoin, Bitcoin”

According to the SCMP, bitcoin’s price may have surged recently due to the generally positive remarks made about it at the Consensus 2019 conference.

Meltem Demirors, the Chief Strategy Officer at CoinShares, a crypto treasury management firm, has also confirmed recently that the narrative this year has been mostly about Bitcoin. Demirors revealed that both institutions and retail investors are “feeling good” and are “more confident” about the long-term potential of Bitcoin and the evolving ecosystem that supports it.