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<ul class="summary-list"><li>Iceland's main utility is turning away new bitcoin miners as it deals with a power crunch, Bloomberg reported Tuesday. </li><li>Iceland has attracted bitcoin miners in need of cheap electricity to scour for new coins. </li></ul><p>Iceland's main power utility is turning away new bitcoin miners in an effort to reduce commercial energy usage during a hydro supply crunch, according to<a href="https://www.bloomberg.com/news/articles/2021-12-07/iceland-reduces-power-to-heavy-users-denies-bitcoin-miners?sref=GUP2BhaG"> a Bloomberg report</a> on Tuesday. </p><p>Iceland holds an attraction for cryptocurrency miners in need of cheap electricity to scour for new coins in the face of a boom and demand and prices. The price of the world's most-traded cryptocurrency has climbed by about 80% during 2021, even <a href="https://markets.businessinsider.com/news/currencies/bitcoin-price-outlook-negative-momentum-suggest-bounces-will-be-temporary-2021-12">after last weekend's dramatic rout.</a></p><p>The utility Landsvirkjun has also reduced power supplies to some industrial customers including aluminum smelters and data centers. The reduction stems from low hydro reservoir levels, a malfunction at a power station, and a delay in obtaining power from an external producer, the report said, citing Landsvirkjun. </p><p>Landsvirkjun is now rejecting all power-supply requests from new clients that mine electronic coins, the report said. </p><p>Among the crypto miners that have been operating in Iceland are <a href="https://markets.businessinsider.com/stocks/hive-stock">Hive Blockchain Technologies Ltd</a>. from Canada, Genesis Mining Ltd., which is listed in Hong Kong, and Bitfury Holding BV. </p><p>Bitcoin on Tuesday traded above $51,000 after Saturday's slide to as low as <a href="https://markets.businessinsider.com/news/currencies/bitcoin-price-crypto-market-crash-ether-leverage-liquidations-btc-eth-2021-12?utm_medium=ingest&amp;utm_source=markets">$42,000 as part of a broader crypto-market crash</a>. Analysts said the selloff was driven by a cocktail of worries including the new Omicron coronavirus variant and increased chances the Federal Reserve will tighten monetary policy. </p><p>Analysts also say the crash was exacerbated by market structure, with many traders using <a href="https://www.businessinsider.com/derivative?IR=T&amp;r=US&amp;utm_medium=ingest&amp;utm_source=markets#:~:text=Derivatives%20are%20a%20contract%20that,movement%20of%20the%20underlying%20stock.&amp;text=The%20key%20benefit%20of%20derivatives%20over%20securities%20is%20leverage."><strong>derivatives</strong></a> and borrowed money. Derivatives are contracts that allow people to bet on the direction of an asset without actually owning it.</p>

Iceland is turning away new bitcoin miners as island nation deals will power crunch

<ul><li>The Chinese government called for a severe crackdown on <keyword id="6354947" type="UNKNOWN" weightage="20" keywordseo="bitcoin">Bitcoin</keyword> mining and trading, setting off a global phenomenon that's often dubbed ‘the great mining migration.’</li><li>China contributed up to 65% of the <a href="https://wazirx.com/signup?invite=2kpah6gr&amp;utm_source=business-insider&amp;utm_medium=referral&amp;utm_campaign=microsite">Bitcoin</a> hash rate, followed by the US, Russia, Kazakhstan, Malaysia, and Iran.</li><li>Miners are actively looking for alternatives and heading west. More precisely, Texas, Florida, or even Canada.</li><li>These regions are trying to woo mines with some of the world's cheapest electricity, a higher share of green energy, and pro-crypto lawmakers.</li></ul>China has long been home to more than half the world's <keyword id="1926395" type="PERSON" weightage="20" keywordseo="Bitcoin-miners">bitcoin miners</keyword>, but now, Beijing <a href="https://www.businessinsider.in/cryptocurrency/news/chinas-inner-mongolia-region-proposed-punishments-for-companies-and-individuals-involved-in-crypto-mining/articleshow/83034373.cms">wants them out</a> as soon as possible. In May, the government called for a severe crackdown on Bitcoin mining and trading, setting off a global phenomenon that's being called ‘<a href="https://www.businessinsider.in/cryptocurrency/news/chinas-crypto-miners-are-looking-at-texas-amid-the-great-mining-migration/articleshow/83601284.cms">the great mining migration</a>.’ <br /><br />The movement is underway right now, and while it means the end of Bitcoin in China, it also means a new region will soon be the focal point of the crypto community. And, there’s no shortage of contenders trying to woo these miners over to their side.<br /><br />Since decentralized finance means the <a href="https://wazirx.com/signup?invite=2kpah6gr&amp;utm_source=business-insider&amp;utm_medium=referral&amp;utm_campaign=microsite">cryptocurrency</a> has no borders or a single regulating party, mining is also scattered. However, it is concentrated around regions that have a cheap source of electricity. Till now, China's Sichuan was a favourable destination thanks to abundant electricity via hydropower, but that's no longer a viable destination. So, where are the miners headed next?<br /><br /><h2 style="line-height:1.38;margin-top:0pt;margin-bottom:0pt;">Head West is the new mantra</h2><br />Mining is the energy-intensive process that creates new coins and maintains a log of all existing digital tokens. The cumulative processing power of the network is called the hash rate. The higher the hash rate, the healthier the blockchain is. Hence, it's a perennial process that cannot afford hiccups at a massive scale.<br /><br />China contributed up to 65% of the <a href="https://wazirx.com/signup?invite=2kpah6gr&amp;utm_source=business-insider&amp;utm_medium=referral&amp;utm_campaign=microsite">Bitcoin</a> hash rate, followed by the US, Russia, Kazakhstan, Malaysia, and Iran. Amid the sudden crackdown, Bitcoin’s hash rate is down by almost 40% from its peak.<br /><br />  <div type="image" title="Average monthly hash rate breakdown by country as of April 2021" msid="83808065" hostid="261"></div><br />Miners are headed west to Texas and Florida — even Canada. Immediately after China's announcement in May, many big mining companies packed up and moved to the former wild west. Some of these names <a href="https://finance.yahoo.com/news/texas-governor-signs-law-creating-125552045.html">include</a> Bitmain, Blockcap, Argo Blockchain, Great American Mining, Layer1, and Riot Blockchain. <br /><br />The region makes for an attractive place to set up shop since it boasts of having some of the world's cheapest electricity, a higher share of green energy, and pro-crypto lawmakers. While China supplied the power, its politicians were never sold on the decentralised idea.<br /><br />As <a href="https://bitcoinmagazine.com/business/bitcoin-mining-firm-blockcap-moves-headquarters-to-texas-as-state-embraces-bitcoin">noted</a> by the former governor of Texas, Rick Perry, miners are a significant accelerant for job creation and sustainable economic growth. And, the current governor, Greg Abbott, has carried that trend forward and put up a huge welcome sign-board for miners. <br /><br />Florida is also wooing crypto miners by offering cheap electricity from its abundant nuclear power plants. “We want to make sure that our city has an opportunity to compete,” Francis Suarez, the Mayor of Miami, told <a href="https://www.cnbc.com/2021/06/17/miami-mayor-francis-suarez-trying-to-win-over-chinese-bitcoin-miners.html">CNBC</a>. “We’re talking to a lot of companies and just telling them, ‘Hey, we want you to be here.’”<br /><br />Similarly, Maryland has also managed to attract at least one mining company from China. A Chinese logistics firm, Fenghua International, <a href="https://twitter.com/onlyyoontv/status/1406911193126785026?ref_src=twsrc%5Etfw">confirmed</a> that it will be flying 3,000 kilos worth of mining equipment from Guangzhou in China to the mid-Atlantic state.<br /><br /><div type="twitter" handle="GregAbbott_TX" handlename="Greg Abbott" image="http://pbs.twimg.com/profile_images/1106778059590565889/M-ak-U5F_normal.jpg" favoritecount="14138" retweetcount="3578" status="Blockchain is a booming industry that Texas needs to be involved in.I just signed a law for Texas to create a mas… https://t.co/3w6btK8yC4" createdat="1622852603000" id="1400971477051133956"></div><br /><h2 style="line-height:1.38;margin-top:18pt;margin-bottom:6pt;">Limited options other than the US</h2>Other possible global destinations include countries like Kazakhstan, which is right next door to China. The nation's coal mines offer a low-cost, abundant energy supply, and the government has building-friendly policies which make it easy to construct offices quickly.<br /><br />BIT Mining has <a href="https://www.coindesk.com/chinese-bitcoin-mining-company-delivers-first-machines-to-kazakhstan">already shifted</a> 320 mining machines to the former Soviet republic and another 2,600 are expected to arrive soon.<br /><br />While the logistics of moving from China to Kazakhstan are more straightforward, but the US offers political stability, wider reach, and has far better chances of pivoting to green energy. <br /><br />Colder regions like Scandinavia, Russia, and Canada offer temperate or even polar temperatures, which aids in keeping the chips cool. While this helps reduce electricity consumption, it only eliminates cooling costs. <br /><br />Canada, for instance, has high electricity costs. And, many other formerly popular options like Iceland, Norway, and Sweden have <a href="https://www.dw.com/en/bitcoin-mining-is-scandinavias-cryptoboom-coming-to-an-end/a-57443905">reached their limit </a>in terms of generation capacity. <br /><br />Iran has encouraged mining over the last few years but announced a surprise ban this summer. The country has issued an order to <a href="https://www.businessinsider.in/cryptocurrency/news/iran-is-planning-to-introduce-a-legal-framework-for-crypto-even-as-bitcoin-mining-activity-remains-restricted/articleshow/83396588.cms">stop mining</a> for a few months since it cannot meet the local energy demand. The government claims the energy requirements of miners have depleted the entire grid, causing frequent blackouts. While the country tries to figure out a middle-ground, the US has taken the lead.<br /><br />Texas even has a brand new solution to offer — oil and gas vent capture technology. Pioneered by companies like Upstream Data, this technology captures escaping gas and turns it into energy. <br /><br />Companies like Great American Mining are also helping oil producers cut their gas byproducts while drilling by converting the wasted gas into potential fuel.<br /><br />The most significant concern surrounding the migration is Texas's capacity to handle the surge because the state's grid has historically <a href="https://www.npr.org/2021/06/02/1002277720/texas-lawmakers-passed-changes-to-prevent-more-blackouts-experts-say-its-not-eno">struggled</a> during extreme weather. During winter, blackouts were a norm in the state, and residents were left with no energy amid freezing temperatures. <br /><br />While companies are making a move, it'll be interesting to see how local communities react to mining farms and their thirst for electricity. <br /><br /><a href="https://forum.businessinsider.in/"><em>For a more in-depth discussion, come on over to Business Insider Cryptosphere</em></a><em> — a forum where users can deep dive into all things crypto, engage in interesting discussions and stay ahead of the curve.</em><br /><em><br /></em><strong>SEE ALSO:<br /><a href="https://www.businessinsider.in/cryptocurrency/news/heres-how-chinas-2021-crypto-crackdown-in-2021-differs-from-the-2017-ban/articleshow/83802778.cms">Here’s how China’s 2021 crypto crackdown in 2021 differs from the 2017 ban</a><br /></strong><a href="https://www.businessinsider.in/business/startups/news/zomato-is-seeking-a-8-billion-valuation-in-its-ipo-does-it-make-sense/articleshow/83801848.cms"><strong>There are a few reasons why Zomato wants $8 billion valuation from its IPO -- here's a look at if it makes sense</strong></a><br />

China’s Bitcoin miners are looking at US, Kazakhstan, Canada, and Europe amid the exodus — but not every option fits the bill

<p><div class="KonaFilter image-container display-table"><div><div class="image on-image"><p class="source"><span>Bill Pugliano/Stringer/Getty Images</span></p><p class="caption">Warren Buffett.</p></div><p></p></div></div></p><ul><li><strong>The founder of a crypto-mining company claims to have installed billboards trolling Warren Buffett.</strong></li><li><strong>Buffett famously compared <a href="http://markets.businessinsider.com/currencies/bcc-usd">bitcoin</a> to rat poison earlier this month. </strong></li><li><strong><a href="http://markets.businessinsider.com/currencies/btc-usd">Follow the price of bitcoin in real-time here. </a></strong></li></ul><p>A <a href="http://markets.businessinsider.com/cryptocurrencies">cryptocurrency</a>-mining company claims to be trolling billionaire investor Warren Buffett with billboards near his Omaha office.</p><p>Marco Krohn, co-founder of<a href="http://www.businessinsider.com/photos-iceland-bitcoin-ethereum-mine-genesis-mining-cloud-2016-6"> Genesis Mining</a>, tweeted photos of the signs that allude to Buffett's admission that he was wrong about investing in mega-cap tech giants <a href="http://markets.businessinsider.com/stocks/amzn-stock">Amazon</a> and <a href="http://markets.businessinsider.com/stocks/goog-stock">Google</a> in their early days. "Maybe you're wrong about Bitcoin?" the signs taunt.</p><p><div class="KonaFilter image-container display-table"><div><div class="image on-image"><a href="https://twitter.com/mkrohn5/status/996892758299303937?s=12"></a><p class="source"><span><a href="https://twitter.com/mkrohn5/status/996892758299303937?s=12">Marco Krohn via Twitter</a></span></p></div><p></p></div></div></p><p>At the <a href="http://markets.businessinsider.com/stocks/brk-a-stock">Berkshire Hathaway</a> annual shareholder meeting earlier this month, Buffett said bitcoin was "<a href="http://markets.businessinsider.com/currencies/news/bitcoin-price-warren-buffett-says-probably-rat-poison-squared-2018-5-1023494784">probably rat poison squared</a>" and urged his fellow investors to avoid the "nonproductive" asset.</p><p>He also admitted he made a mistake by not investing in tech giants in their early day. "I made the wrong decisions on Google and Amazon," <a href="https://www.cnbc.com/2018/05/05/buffett-i-was-wrong-on-google-and-amazon-bezos-achieved-a-business-miracle.html"><span>he said.</span></a></p><p>The price of bitcoin and most other major cryptocurrencies have fallen dramatically in 2018, a steep departure from last year when their prices seemed to only move upward at a jaw-dropping pace. Bitcoin has declined by 40% since the start of the year.</p><p>Genesis Mining, which claims to have installed the billboards that have not been verified by Business Insider, runs a massive crypto-mining operation in Iceland. <a href="http://www.businessinsider.com/photos-iceland-bitcoin-ethereum-mine-genesis-mining-cloud-2016-6">You can see photos of their gargantuan data center here. </a></p><p class="tagline">Get the latest Bitcoin price <a href="http://markets.businessinsider.com/currencies/BTC-USD">here.&gt;&gt;</a></p>    <div class="margin-top">        <h3>NOW WATCH: <a href="http://www.businessinsider.com/jeff-bezos-interview-axel-springer-ceo-amazon-trump-blue-origin-family-regulation-washington-post-2018-4">Jeff Bezos reveals what it's like to build an empire and become the richest man in the world - and why he's willing to spend $1 billion a year to fund the most important mission of his life</a></h3>        <div>                    </div>    </div>

A crypto miner trolls Warren Buffett with bitcoin billboards outside his office

<p><strong><div class="KonaFilter image-container display-table"><div><div class="image on-image"><p class="source"><span>Lydur Skulason/Flickr, CC BY</span></p></div><p></p></div></div></strong></p><ul><li><strong>Iceland will likely use more electricity in the next year to mine bitcoin than it uses to power every single home in the country. </strong></li><li><strong>Bitcoin mining is booming in Iceland, and energy providers are worried they won't be able to power new mining companies.</strong></li><li><strong>Iceland's cool weather, cheap energy and super-fast networks have made the country a popular home for bitcoin mining.</strong></li><li><strong>Members of the government have proposed taxing profits made by bitcoin mining companies. </strong></li></ul><p><br />Iceland may soon use more electricity to mine bitcoin than it uses to power every home, according to an Icelandic energy expert. </p><p>The energy used by Iceland's bitcoin mining market is experiencing "exponential growth," and data centers may use more energy than all of the country's homes in 2018, <span>Johann Snorri Sigurbergsson from Icelandic energy company HS Orka told the <a href="http://www.bbc.com/news/technology-43030677">BBC</a>.</span></p><p><span>Sigurbergsson also said HR Orka "won't have enough energy" to power numerous new data centers that have been proposed.</span></p><p><span><a href="http://www.businessinsider.com/how-to-mine-cryptocurrency-make-bitcoin-without-knowing-anything-2018-2/#before-anything-you-have-to-make-sure-you-have-the-right-gear-1">Bitcoin mining</a> occurs when </span>computers verify existing bitcoin transactions by solving complex mathematical problems, and then receive bitcoin as a reward.</p><p>Sigurbergsson told the BBC he estimates Iceland's bitcoin mining tools currently use around 840 gigawatt hours of electricity to power computers and cooling systems each year, while most of the country's homes use around 700 gigawatt hours.</p><h2>Iceland is a popular crypto mining destination</h2><p>Bitcoin mining <a href="http://www.businessinsider.com/photos-iceland-bitcoin-ethereum-mine-genesis-mining-cloud-2016-6/?r=US&amp;IR=T#/#these-photos-are-from-genesis-mining-a-cloud-mining-company-it-lets-customers-mine-using-their-cloud-without-having-to-buy-specialised-hardware-1">thrives in Iceland</a>, where energy is cheap, and internet connections use <a href="https://genexis.eu/news/iceland-number-one-country-worldwide-in-homes-connected-to-fiber/">super fast fiber-optic networks</a>.</p><p>Additionally, Iceland's cold climate plays an important role in ensuring crypto utilities don't overheat. Mining hardware generates large amounts of heat, and Iceland's year-round cool weather saves companies from additional temperature control costs.</p><p>But the centers still use huge amounts of electricity.</p><p><span>Genesis Mining, one of the largest crypto miners in Iceland, has opened three mining facilities in Iceland and in 2016 </span><span>CEO Marco Streng speculated the company</span> may be one of the biggest single users of power in the country. </p><p>The rise of crypto mining in the country has prompted government members to consider steps to tax the industry.</p><p><span>"Under normal circumstances, companies that are creating value in Iceland pay a certain amount of tax to the government," Smari McCarthy, a member of Iceland's Pirate Party, <a href="https://apnews.com/a6cd50b37105447991be9a9ce76c2421">told the Associated Press</a>. "These companies are not doing that, and we might want to ask ourselves whether they should."</span><span></span></p> <p class="tagline">Get the latest Bitcoin price <a href="http://markets.businessinsider.com/currencies/BTC-USD">here.&gt;&gt;</a><br><br><div id="categorypromo" style="border:1px solid silver; min-height:90px; padding:10px;vertical-align:top;"><a href="http://read.bi/bitcoin-101-free"></a><strong>EXCLUSIVE FREE REPORT:</strong><br>The Bitcoin 101 Report by the Business Insider Intelligence Research Team.<br><strong><a href="http://read.bi/bitcoin-101-free">Get the Report Now »</a></strong></br></br></div></br></br></p>    <div class="margin-top">        <h3>NOW WATCH: <a href="http://www.businessinsider.com/stock-market-sell-off-dow-volatility-jurrien-timmer-fidelity-bonds-2018-2">Here's why the recent stock market sell-off could save us from a repeat of "Black Monday"</a></h3>        <div>                    </div>    </div>

Iceland may use more electricity to mine bitcoins than it does to power all of its houses this year

<p><div class="KonaFilter image-container display-table float_right"><div><div class="image on-image"><p class="source"><span>Genesis Mining</span></p></div><p></p></div></div>Bitcoin is <a href="http://uk.businessinsider.com/bitcoin-price-skyrocketing-june-13-halvening-2016-6">surging like crazy right now</a>. The digital currency is hitting highs not seen since February 2014, jumping by well over 30% in a month.</p><p>It's great news for bitcoin miners, the people responsible for creating new bitcoin.</p><p>Mining infrastructure is the backbone of bitcoin. Anyone who contributes computing power to help process transactions on the network is rewarded with the chance to "mine" bitcoin.</p><p>In plain English, in return for helping keep the network up and running, they have the chance of being given a newly created piece of the digital currency.</p><p>This payout makes the entire process - with the right equipment - incredibly lucrative. It has helped spawned a huge and surreal industry.</p><p>You can mine at home, and many people do. But companies dedicated to mining have also sprung up, <a href="http://www.coindesk.com/bitcoin-miner-bitfury-raises-20-million/">some worth tens of millions of dollars</a>.</p><p>These companies build huge data centres, or "mines," that consume vast amounts of power and perform insane computations on the hunt for digital gold.</p><p>Here's a look inside one:</p>

Look inside the surreal world of an Icelandic bitcoin mine, where they literally make digital money

<p><div class="KonaFilter image-container display-table float_right"><div><div class="image on-image"><p class="source"><span>Genesis Mining</span></p></div><p></p></div></div>Mining is the backbone of bitcoin.</p><p>It's the process that creates new bitcoin: By contributing computing power to process transactions on the bitcoin network, "miners" are rewarded with a portion of the digital currency.</p><p>This payout makes the entire process - with the right equipment, incredibly lucrative, and has spawned a huge and surreal industry.</p><p>You can mine at home, and many people do. But companies dedicated to mining have also sprung up, <a href="http://www.coindesk.com/bitcoin-miner-bitfury-raises-20-million/">some worth tens of millions of dollars</a>.</p><p>These companies build huge data centres or "mines," that consume vast amounts of power and perform insane computations on the hunt for digital gold. </p><p>Here's a look inside one.</p>

<p>Jim Rickards is the editor of Strategic Intelligence and the author of <em><a href="https://www.amazon.com/Currency-Wars-Making-Global-Crises/dp/B006JAM3UU/?tag=bisafetynet2-20" target="_blank" rel="noopener">Currency Wars: The Making of the Next Global Crisis</a>.</em> He believes <a href="http://www.businessinsider.com/this-is-why-you-should-be-buying-gold-2017-11" target="_blank" rel="noopener">gold can go to $10,000 an ounce</a> but he is much more skeptical about bitcoin. Rickards doesn't trust the bitcoin price action and doesn't believe the cryptocurrency will fare well in a financial crisis. Following is a transcript of the video. </p><p><strong>Jim Rickards: </strong><span style="font-weight: 400;">Hi, I am Jim Rickards,  editor of strategic intelligence. Today I'm going to talk today about gold vs. Bitcoin - it's a very popular debate. I'm happy to say the gold and bitcoin are both forms and money but it's a liquidity preference which do you prefer in a crisis?    </span></p><p><strong>Sara Silverstein:</strong><span style="font-weight: 400;"> So we've been talking a lot about gold versus bitcoin, everybody has. You love gold. How do you feel about bitcoin? How do the two compare?</span></p><p><strong>Rickards:</strong><span style="font-weight: 400;"> Personally I'm very skeptical of bitcoin, I know where the price action is. It's, you know, going up about 10% a day at this point. Although bitcoin could go up to 20,000, it can go to 30,000. It's on it's way to zero - somewhere between zero and 200. It's a utility token for criminals, terrorists, money launderers, tax evaders - they'll always find some use for it. So it might not go all the way to zero. It's clearly a bubble - it looks like the second biggest bubble in history after tulip mania. Although at the rate it's going it will pass tulip mania, you know, in a matter of days. [It's] bigger than the south sea bubble, bigger than the Mississippi bubble, New York's - the Dow Jones in 1929, the Nikkei in 1989 - name your bubble, it's bigger than all of them. So I don't own any, I don't recommend it to clients. But, you know, I'm a free market guy, if people want to buy it, you know, knock yourself out.</span></p><p><strong>Silverstein: </strong><span style="font-weight: 400;">And why are you skeptical of the price transactions?</span></p><p><strong>Rickards:</strong><span style="font-weight: 400;"> A couple reasons - number one, there's pretty good evidence that there's a lot of fraud going on. Look, every market in the world - gold, silver, stocks, bonds, Libor - every market, you name it. They've all been searching to manipulation. That's why we have all these regulators; that's why we have the SEC; that's why the stock exchange is regulated, etc. Are we supposed to believe that bitcoin is the only market in history that's not manipulated? That's nonsense, of course it is.</span></p><p><span style="font-weight: 400;">In fact, the fact that it's unregulated is a magnet for all the manipulators who probably were, you know, The Wolf of Wall Street, you know, 20 years ago. So the point is - imagine the following: you and I are bitcoin miners, right? So I sell you at 10,000. You sell back to me to 10,100. I sell back to you at 10,200. We just traded back and forth all day. There's no P&amp;L. We're trading the same bitcoin back and forth. That's called painting the tape. These exchanges get reported on the bitcoin exchanges. So an outsider who's completely naive about this, says, "oh look the price is going up."</span></p><p><span style="font-weight: 400;">It's just you and me painting the tape. It's the oldest, you know, the oldest fraud in the book. It's call a ramp or, you know, whatever you want to call it. But the point is that brings in the suckers from the sidelines and then they buy it. And, of course, what do we care? We're miners so our costs - the costs are going up very steeply by the way - this thing is completely non-sustainable. There have been - the amount of electricity power - the reason the bitcoin miners are in China is because they burn coal, pollute the air, and have subsidized electricity. Or they're in Iceland because it's so cold, it reduces their cooling costs for all the computing power.</span></p><p><span style="font-weight: 400;">Right now they're using - bitcoin miners - every year are using as much electricity as the country of Nigeria - a country of 90 million people. Before long will be using as much as Japan, third largest economy in the world. That's not going to happen. You can say that, that's the simple extrapolation, but there's no way the bitcoin industry is going to be allowed to use as much electricity as the country of Japan. But that's how much you need to mine the bitcoin. So they're going to hit a wall, in terms of total bitcoin output. At that point the miners have no incentive to mine. So who's going to validate the blockchain? Are they going to charge a fee? Well fine, that sounds like Wells Fargo. That's what banks do.  </span></p><p><strong>Silverstein: </strong><span style="font-weight: 400;">And when you talk about the electricity cost and other costs of mining, and some people equate that with the value of bitcoin. Where do you stand on the valuation theory of ...</span></p><p><strong>Rickards:</strong><span style="font-weight: 400;"> Yeah that would be like looking at electricity and mining costs, that would be what you call intrinsic value, which is not how we've valued anything since 1871. David Ricardo came up with the theory of intrinsic value around 1812. Karl Marx took the ball and ran with it. And he said yeah, intrinsic value, but you know, capitalists control the means of production so they extract excess value from labor, labor doesn't get their fair share. All that's nonsense in terms of how we value things. This was overthrown by Karl Manger in 1871, University of Vienna.</span></p><p><span style="font-weight: 400;">He came up with a subjective theory of value. Something is worth what anyone will pay for it. If you and I - you know, if I'm a miner - say a gold miner, a real gold miner, and my costs of production are $1,400 an ounce and the market for gold is $1,300 an ounce, you don't care about me. You'll say, "Jim, I'll pay you $1,300. I'm not going to pay you $1,400, just because your costs are higher. That's your problem." So intrinsic value is meaningless. What does matter is subjective value. And that's true of bitcoin and gold. So when I see bitcoin at $11,000 an ounce or whatever, that's somebody's subjective valuation of what it's worth, leaving aside the fact that the price is manipulated. That's a separate issue.</span></p><p><span style="font-weight: 400;">But the point of subjective value is based on confidence. It's a liquidity preference. If you're willing to transfer your hard-earned dollars to get a bitcoin, you're expressing a liquidity preference for a different form of money. But confidence is fragile. It can be very easily lost and when it's lost, it's impossible to regain. So there are lots of forms of money in the world. I consider gold money. I'll say bitcoin's money. Euro's money, dollar, yen, yuan - they're all forms of money. Which one do you want? Where do you want to put your wealth? That's a liquidity preference. </span><span style="font-weight: 400;">And again, if you're throwing your wealth into bitcoin and that confidence is lost, what's left?</span></p><p><strong>Silverstein: </strong><span style="font-weight: 400;">And so if intrinsic value doesn't matter, because that's the strong argument we hear a lot for gold.</span></p><p><strong>Rickards:</strong><span style="font-weight: 400;"> It doesn't matter.</span></p><p><strong>Silverstein: </strong><span style="font-weight: 400;">So then what - is it all a liquidity preference? What makes gold more valuable in your eyes than bitcoin?</span></p><p><strong>Rickards: </strong><span style="font-weight: 400;">Well basically it has been around a long time. Bitcoin has never weathered a recession or financial crisis. So bitcoin was invented in 2009. We have not had a recession or financial crisis in 2009. We did in 2008, 1998, and many others throughout history - 1929, 1873, you name it. I know how well the other asset classes perform in panics. And, you know, not just gold - gold, stocks, bonds - you can see how they perform. We've never seen bitcoin's performance in a financial panic. So that's a big uncertainty right there, leaving aside the criminality, and the electricity usage, and the fraud, and painting the tape, and who's behind these exchanges - leaving aside all those issues, which I think are big ones. Even just in a pure economic sense, we have no idea how bitcoin will perform in a panic. My estimate is not very well. </span></p><p><strong>Silverstein: </strong><span style="font-weight: 400;">And what is the one thing that can cause the whole thing to collapse - bitcoin to go to zero?</span></p><p><strong>Rickards:</strong><span style="font-weight: 400;"> I think if one of these frauds were exposed. And there is some research out there. Bear in mind, there's nobody kind of looking into these things. There are no regulators. The one big thing, which I do expect is, you know, let's say you bought a bitcoin for $1,000 and you sold it for $8,000 or, you know, couple days ago or exchange it, you have $7,000 gain you have to put in your tax return. It's no different than buying IBM at 150 and selling it at 180. You have to put the $30 gain on your tax return. How many bitcoin sellers are putting those gains on their tax returns? I don't know the answer, but my guess is very few. If you don't, you're a felon. That's a felony. That's how Al Capone ended up in Alcatraz. And people say, "Oh the IRS will never catch me." Believe me, I was a tax lawyer before I was a securities lawyer. I was the tax counsel to Citibank. The IRS will track you down. They have ways of doing it. People - Americans who had offshore bank accounts in Switzerland - prior to five or six years ago - thought the IRS would never find them either. And they did. </span></p><p><span style="font-weight: 400;">One whistleblower took a CD with all the names and handed it to the IRS. And some of those people are in jail. They've arrested brothel owners for tax evasion by counting the laundry bill. They said - they put the burden of proof on you. They say, "No, we estimate your taxes by the following, prove it's not." The burden of proof is on you. So they're going to come into all these exchanges, they're going to request all the books and records. The exchanges are going to give them up, or they'll be shut down, or they'll be frozen. Remember even if you have bitcoin exchange you still have to - you have points of connection with the dollar payment system or the euro payment system. You got to get the money in to sell the people the bitcoin. They can all be shut down. They can all be interdicted. The thing - all these things can be frozen. The IRS is all the authority they need. So between the SEC looking at initial coin offerings, the IRS looking at tax evasion, the FBI looking at criminality, and who knows what else is going on, I just don't want to play in that space.</span></p><p class="tagline">Get the latest Bitcoin price<a href="http://markets.businessinsider.com/currencies/BTC-USD"> here.&gt;&gt;</a></p>

Economist Jim Rickards on gold versus bitcoin - intrinsic value is meaningless for both but the bitcoin prices aren't real

<p><div class="KonaFilter image-container display-table float_right"><div><div class="image on-image"><p class="source"><span><a href="http://pictures.reuters.com/C.aspx?VP3=SearchResult&amp;VBID=2C0FCIZ58VADR&amp;SMLS=1&amp;RW=1504&amp;RH=818#/SearchResult&amp;VBID=2C0FCIZ58VADR&amp;SMLS=1&amp;RW=1504&amp;RH=818&amp;POPUPPN=19&amp;POPUPIID=2C0BF1FC8DD55">REUTERS/Aly Song</a></span></p><p class="caption">An investor reacts in front of an electronic board showing stock information at a brokerage house in Shanghai, China, March 7, 2016.</p></div><p></p></div></div>LONDON - Bitcoin trading in China has exploded over the last few years and the country today accounts for <a href="http://uk.businessinsider.com/bitcoin-trading-china-yuan-remnibi-2017-1">as much as 99% of all volume by some estimates.</a></p><p>Why?</p><p>Bobby Lee, the co-founder and CEO of one of China's biggest bitcoin exchanges, BTCC, believes there are two reasons: a Chinese love of investing and the popularity of bitcoin mining in the country.</p><p>"Chinese people lack a lot of opportunities to invest," Lee told Business Insider. "Bitcoin is a high-growing, volatile asset class. In some ways, it's a very ripe opportunity for day trading to make money."</p><p>Swings of 5% or more in a single day for bitcoin are not unusual, representing an opportunity for speculators to make a quick buck on the currency - or of course stomach a sizeable loss.</p><p>A love of investing - or often, simply speculating on stocks - was highlighted by <a href="http://uk.businessinsider.com/chinese-stocks-are-getting-hammered-again-2015-8">China's "Black Monday" stock market crash in the summer of 2015</a>. Markets fell as much as 10% in a single day after being <a href="http://uk.businessinsider.com/statistics-on-chinese-invested-in-stock-market-crash-2015-7">pushed higher in the months before by huge amounts of retail investors ploughing money into stocks.</a></p><p>Lee, who was raised in the US and worked for Yahoo for many years, said: "As with probably many countries, there's a lot of greed and a lot of acceptance of new technologies. Bitcoin is uniquely poised to be well accepted in society."</p><p>However, this speculation has led to recent volatility and concerns that a bitcoin price bubble could be emerging. The People's Bank of China (PBoC) has<a href="http://uk.businessinsider.com/heres-why-bitcoin-is-tumbling-2017-1"> recently taken action to curb this</a> and <a href="http://uk.businessinsider.com/btcc-ceo-bobby-lee-on-bitcoin-regulation-in-china-and-pboc-2017-1">Lee believes regulation of the market is inevitable.</a></p><p>The second reason for bitcoin's popularity, Lee believes, is "bitcoin mining is very popular in China, relatively speaking to other countries."</p><p>Mining is the process by which bitcoin is created. Computers solve complex cryptographic problems that are generated by the buying and selling of the digital currency itself, which allows the decentralized network to function. In return for this work, the computers - or rather their owners - are rewarded with newly created bitcoins.</p><p>To control the pace of the process, the amount of cryptographic work required to earn a bitcoin gets harder and harder every time, requiring hugely powerful computers (<a href="http://uk.businessinsider.com/photos-iceland-bitcoin-ethereum-mine-genesis-mining-cloud-2016-6">take a look inside an Icelandic bitcoin mine to get an idea of what we're talking about.</a>)</p><p>The BBC estimated last year that <a href="http://www.bbc.com/future/story/20160504-we-looked-inside-a-secret-chinese-bitcoin-mine">as much of 70% of bitcoin mining is now done in China</a>. Lee says: "Because of that, a healthy ecosystem grows on top of each other: the miners, the people who trade, buy, sell."</p><p>However, one thing that has notably <em>not</em> contributed to bitcoin's popularity in China is its use as actual currency. Lee, speaking to BI during London Blockchain Week, says: "Bitcoin, unfortunately, has not taken off in China as a form of payment. I know in European countries, people use bitcoin to buy coffee, buy things. In China that hasn't happened yet.</p><p><div class="KonaFilter image-container display-table float_left"><div><div class="image on-image"><p class="source"><span><a href="http://pictures.reuters.com/C.aspx?VP3=SearchResult&amp;VBID=2C0BXZJ1X8F3D&amp;SMLS=1&amp;RW=1440&amp;RH=720#/SearchResult&amp;VBID=2C0BXZJ1X8F3D&amp;SMLS=1&amp;RW=1440&amp;RH=720&amp;POPUPPN=4&amp;POPUPIID=2C0FQEQ6983J">REUTERS/David Gray</a></span></p><p class="caption">A pub in Australia that accepts bitcoin.</p></div><p></p></div></div>"I think the reason is a little bit cultural. Firstly, the Chinese government insists that the renminbi is the only circulating currency in China. There's a sort of stigma to try to use bitcoin for payment.</p><p>"The second reason is China actually has very competitive online payment forms - Alipay and WeChat Pay. These are the two dominant payment systems. For these reasons, bitcoin has not made any dents. Plus, the PBoC is watching closely."</p><p>This poses a slight problem for Lee. BTCC's view is that "bitcoin's killer use case is as money," he says. The company, which also develops blockchain and bitcoin mining technology alongside its popular exchange, recently launched Mobi, a mobile wallet that uses bitcoin as a backbone for a "global wallet."</p><p>"Essentially this wallet has all currencies on it, you can choose from over 50 global currencies," Lee says. "You can sign up with just a mobile phone number. It allows you to send money to anyone in the world, just with mobile phone number. You don't need to know their bitcoin wallet number or bank account number."</p><p>Launched at the start of January, Mobi has been downloaded 20,000 times across 90 countries, Lee says.</p><p>"BTCC has always been global in outlook but it started out in China with the exchange," he says. "Our mission is to bring these digital currency services to the world."</p><p class="tagline"><div id="categorypromo"><p><h2><span>Learn more:</span></h2><ul><li><a href="http://read.bi/pay1">Credit Card Industry and Market</a></li><li><a href="http://read.bi/pay2">Mobile Payment Technologies</a></li><li><a href="http://read.bi/pay3">Mobile Payments Industry</a></li><li><a href="http://read.bi/pay4">Mobile Payment Market, Trends and Adoption</a></li><li><a href="http://read.bi/pay5">Credit Card Processing Industry</a></li><li><a href="http://read.bi/pay6">List of Credit Card Processing Companies</a></li><li><a href="http://read.bi/pay7">List of Credit Card Processing Networks</a></li><li><a href="http://read.bi/pay8">List of Payment Gateway Providers</a></li><li><a href="http://read.bi/pay9">M-Commerce: Mobile Shopping Trends</a></li><li><a href="http://read.bi/pay10">E-Commerce Payment Technologies and Trends</a></li></ul></p></div></p>    <div class="margin-top">        <h3>NOW WATCH: <a href="http://www.businessinsider.com/royal-mint-new-twelve-sided-one-pound-coin-queen-elizabeth-secure-coin-hologram-2017-1">The new 12-sided £1 coin will be the most secure coin in the world</a></h3>        <div>            <div>        <div class="ooyala-video-player" data-video-autoplay="false" data-video-id="N0aW1wODE6jQB25FprTUffuW8b_d13GC" data-player-variable="ooyalapopvideo" id="ooyalaplayer_popvideo" style="width:1280px;height:720px"></div>        </div>        </div>            </div>

Here's why the Chinese love bitcoin

<p><div class="KonaFilter image-container display-table"><div><div class="image on-image"><p class="source"><span>Matt Weinberger/Business Insider</span></p><p class="caption">The formerly Kodak-branded bitcoin mininig device from Spotlite, on display on Thursday, January 11, 2018 at Kodak's booth at CES in Las Vegas.</p></div><p></p></div></div></p><ul><li><strong>A Kodak-branded Bitcoin-mining rig which premiered at CES will not go ahead.</strong></li><li><strong>The company behind the project, Spotlite, told the BBC the scheme has has been blocked by the US financial watchdog.</strong></li><li><strong>Originally the rig was marketed as a rentable Bitcoin miner, for which customers would pay $3,400 up front for a two-year deal.</strong></li><li><strong>Critics were sceptical of the machines, with some dubbing them a "scam."</strong></li></ul><p><br />A weird scheme to launch a Kodak-branded bitcoin mining rig, <a href="http://uk.businessinsider.com/kashminer-kodak-bitcoin-mining-2018-1?r=US&amp;IR=T">first shown off at CES in January</a>, has collapsed.</p><p>Spotlite, the company which licensed Kodak's brand and built the rigs, <a href="https://www.bbc.co.uk/news/technology-44845291">told the BBC</a> that the scheme won't be going ahead.</p><p>Spotlite's CEO Halston Mikail told the BBC in a phone call that the plan had been blocked by the US Securities and Exchange Commission (SEC), and that company would now operate its machines privately with kit installed in Iceland.</p><p>There are some inconsistencies between what Spotlite and Kodak told reporters at CES in January, and what the two firms are saying now.</p><p>In January a representative for Spotlite said demand for the KashMiner rigs was high, and that 80 miners were already in operation. Mikail also outlined a plan to install some rigs at Kodak's headquarters, according to media reports. But Kodak told the BBC on Monday that no devices were ever installed.</p><p><div class="KonaFilter image-container display-table"><div><div class="image on-image"><p class="source"><span>Matt Weinberger/Business Insider</span></p><p class="caption">Kodak handed out flyers at CES featuring the Bitcoin rig.</p></div><p></p></div></div></p><p>And at CES, Kodak's booth prominently displayed the branded Kodak KashMiner, with Kodak apparently having licensed its brand to Spotlite. But later in the week at CES, Kodak's brand was conspicuously missing from the mining rigs. And on Monday, Kodak told the BBC the rigs were never officially licensed.</p><p>Critics were highly sceptical of the KashMiner when it first launched, and some <a href="https://twitter.com/saifedean/status/950881579362127872">labelled the project a scam</a>. Kodak and Spotlite originally planned to ask prospective customers to sign a two-year deal and pay $3,400 up front to rent the mining machines. Additionally, Spotlite would keep half of all currency mined by the machine.</p><p>Kodak and Spotlite claimed that people who rented the rigs would make $375 a month, resulting in $9,000 over the two-year rental period. However critics said that the companies hadn't taken into account the fact that mining Bitcoin becomes more difficult over time.</p><p>Business Insider has contacted Kodak, Mikail and the SEC for comment.</p>     <div class="margin-top">        <h3>NOW WATCH: <a href="http://www.businessinsider.com/we-controlled-a-light-display-with-our-brain-activity-science-2018-7">We used a headset that transforms your brain activity into a light display - here's how it works</a></h3>        <div>                    </div>    </div>

A weird scheme to rent out Kodak-branded bitcoin mining rigs has collapsed

<p><div class="KonaFilter image-container display-table float_right"><div><div class="image on-image"><a href="http://markets.businessinsider.com/currencies/BTC-USD"><p class="source"><span>Thomson Reuters</span></p><p class="caption">Servers for data storage are seen at Advania's Thor Data Center in Hafnarfjordur, Iceland</p></a></div><p></p></div></div>Bitcoin power brokers were unable to come behind a single solution that would have preserved a unified cryptocurrency by Tuesday morning's deadline.</p><p>As such, the digital currency has officially <a href="http://www.businessinsider.com/bitcoin-price-fork-happens-2017-8">forked and split in two</a>: bitcoin cash and bitcoin.</p><p>Bitcoin cash is a fork of the bitcoin system: It's a new software that has all the history of the old platform - the main difference being it will have 8 megabyte blocks instead of 1 megabyte blocks, making it faster.</p><p>Miners have been able to mine for bitcoin cash since this morning. But the first bitcoin cash was reportedly mined at about 2:20 PM, <a href="https://twitter.com/coindesk/status/892448540059947009">according to CoinDesk</a>.</p><p>But some bitcoin enthusiasts think this will only be the first split the cryptocurrency will experience.</p><p><a href="http://www.businessinsider.com/bitcoin-price-war-amid-volatility"> To recap, Bitcoin power brokers have been squabbling over the rules</a> that should guide the cryptocurrency's blockchain network.</p><p>On one side are the so-called core developers. They are in favor of smaller bitcoin blocks to protect it against hacks. On the other side are the miners, who want to increase the size of blocks to make the network faster and more scalable.</p><p>Until last week, the solution known as Segwit2x, which would double the size of bitcoin blocks to 2 megabytes, had universal support. Those pro-Segwit2x miners who did not participate in the fork began implementing part of Segwit2x today.</p><p>According to Charles Morris, a chief investment officer of NextBlock Global, an investment firm with digital assets, since Segwit2x is not fully implemented, another fork is on the horizon.</p><p>The part of Segwit2x that increases the block size will not be implemented for another three months, according to Morris.</p><p>"Hardliners who don't want to see the size of blocks increase could spark another fork down the line," he said.</p><p>Peter Borovykh of Blockchain Driven, a blockchain technology company, told Business Insider that Tuesday's split sets a precedent.</p><p>"Bitcoin is no longer immutable," he told Business Insider. "If one fork happens, then it could trigger an avalanche."</p><p>Arthur Hayes, the CEO of BitMex, a bitcoin derivatives exchange, <a href="http://www.businessinsider.com/bitcoin-price-war-amid-volatility">told Business Insider</a> when all is said in done there could be up to four iterations of bitcoin.</p><p>To be sure, that doesn't mean Hayes think they'll all become worthless.</p><p>"There are people with billions of dollars of skin in the game and they will ultimately go with the superior bitcoin network, and then the market will follow," Hayes concluded. </p><p>In the end, Hayes thinks the winning bitcoin could reach $5,000 a coin.</p><p class="tagline">Get the latest Bitcoin price<a href="http://markets.businessinsider.com/currencies/BTC-USD"> here.</a></p>    <div class="margin-top">        <h3>NOW WATCH: <a href="http://www.businessinsider.com/gene-munster-artificial-intelligence-ai-google-amazon-apple-2017-7">Gene Munster on the AI debate: I'm on team Zuck</a></h3>        <div>            <div>        <div class="ooyala-video-player" data-video-autoplay="false" data-video-id="82b3EzYzE6Rs1jBagzJj1oMkNA3tkNQm" data-player-variable="ooyalapopvideo" id="ooyalaplayer_popvideo" style="width:1280px;height:720px"></div>        </div>        </div>            </div>

Bitcoin might split again - here's what you need to know

<p><div class="KonaFilter image-container float_right"><div class="image on-image"><p class="source"><span>ABG/Getty Images</span></p></div><p></p></div>Few people actually own their own private planes outright.</p>
<p>Instead, they buy into companies that sell shares in them, dividing up the cost of maintaining what would otherwise be a ludicrously expensive enterprise.</p>
<p><a href="http://dealbook.nytimes.com/2013/12/21/into-the-bitcoin-mines/?hpw&amp;rref=technology">As the New York Times' Nathaniel Popper points out today</a>, this is professional cost-sharing arrangement now how many profit-seeking Bitcoin fanatics have begun approaching mining the digital currency.</p>
<p>Bitcoins are mined by computers unscrambling encrypted bits of numbers. As more Bitcoin are mined, increasingly greater amounts of computing power, and thus electricity, are required. As we've discussed, the fastest miners on the market <a href="http://www.businessinsider.com/most-powerful-bitcoin-miner-knc-jupiter-2013-12">now sell for thousands of dollars</a>, on top of whatever electricity costs you have to pay to keep what amounts to a supercomputer running 24/7.</p>
<p>So how do you keep those costs in check? </p>
<p>Pool your resources and move to Iceland, of course.</p>
<p>T<span style="font-size: 15px; line-height: 1.5em;">hanks to vast geothermal and and hydropower reserves industrial electricity costs $0.02-$0.03 per kilowatt hour, compared with  $0.07 in the U.S.</span></p>
<p>Among those leading the push to professional, industrial-scale Nordic mining, the Times' Popper writes, is <span>Emmanuel Abiodun, 31. </span>This October, the former HSBC analyst from London moved the operations of his professional mining pool business, called Cloud Hashing, to Reykjavik. His 100 machines can now crank out <span style="font-size: 15px; line-height: 1.5em;">225 Bitcoins a week. </span></p>
<p><span style="font-size: 15px; line-height: 1.5em;">The cost to join the pool and own a tiny fraction of that haul? $999. But 4,500 people have signed up, and Abiodun says he's about to open another site in Texas, where it will be more expensive to mine but put him in greater proximity to the mining machines' creators, Austin-based Cointerra.</span></p>
<p><a href="http://dealbook.nytimes.com/2013/12/21/into-the-bitcoin-mines/?hpw&amp;rref=technology"><em style="font-size: 15px; line-height: 1.5em;">Click here to read the full story »</em></a></p>

Bitcoin Mining Is Becoming A Professional, Industrial, Nordic Enterprise

<p><span><div class="KonaFilter image-container display-table float_right click-to-enlarge"><div><div class="image on-image"><a title_source="YouTube / BitcoinInvestor.com" title_caption="Craig Steven Wright" class="zoomin" href="https://static-ssl.businessinsider.com/image/5668702edd089573638b472e-960/screen shot 2015-12-09 at 16.11.21.png"><span class="sprites click-to-enlarge-icon" title="Click to enlarge"></span></a><p class="source"><span><a href="https://www.youtube.com/watch?v=LdvQTwjVmrE">YouTube / BitcoinInvestor.com</a></span></p><p class="caption">Craig Steven Wright</p></div><p></p></div></div>Craig Steven Wright is the most-wanted Australian on the planet right </span>now,<span> <a href="http://uk.businessinsider.com/incredible-career-of-craig-steven-wright-australian-scientist-suspected-of-creating-bitcoin-2015-12">after tax authorities raided his home</a> and </span><a href="http://www.wired.com/2015/12/bitcoins-creator-satoshi-nakamoto-is-probably-this-unknown-australian-genius/">two reports named him</a><span> as </span><a href="http://gizmodo.com/this-australian-says-he-and-his-dead-friend-invented-bi-1746958692">the likely inventor of Bitcoin</a><span>. </span></p><p><span>Currently, no one knows where he is. Wright has taken <a href="http://gse-compliance.blogspot.co.uk/2013/05/making-pencil.html">his blog</a>, his <a href="https://www.linkedin.com/in/craigswright">Linkedin</a> and <a href="https://www.youtube.com/watch?v=pGmZ7v3TB2Y">his YouTube accounts</a> offline.</span></p><p><span>He <a href="https://www.youtube.com/watch?v=LdvQTwjVmrE">told a Bitcoin conference in November</a> that he was about to travel to London or Iceland, two locations where he has previously lived and studied.</span></p><p><span>In that conference, where he appeared on a panel via Skype, he was asked about the computers he runs. Wright said he was based "in I</span><span>celand because of power. It's much, much cheaper in Iceland to run supercomputers" and that the computer he was building was "No. 15 in the </span><span>top 500 supercomputers globally." (The cost of mining Bitcoin is determined largely by the amount of electricity you need to do the computer processing, and that cost is vastly reduced if you don't need to keep the machines cool - so Bitcoin miners prefer cold climates for their computers.) </span></p><p><span>When asked what he was doing with Tulip, Wright replied, "we've been modeling Bitcoin scalability for a number of years now." It wasn't clear what he meant by that, but he seemed to be trying to avoid describing directly what he was actually doing. <a href="http://www.wired.com/2015/12/bitcoins-creator-satoshi-nakamoto-is-probably-this-unknown-australian-genius/">One theory about Wright is that he is in possession of a Bitcoin trove worth $60 million</a>.</span></p><p><span>The name of his Iceland computer is "Tulip," Wright said.</span></p><p><span>When asked why he named the machine Tulip, he said that the name was a reference to the "tulip mania" bubble that afflicted the Netherlands in 1637. In the tulip bubble, Holland's tulip bulbs suddenly rose in price as people traded them. Bulbs briefly became more valuable than a year's income for some workers. Prices collapsed again suddenly, wiping out several fortunes. The episode is generally regarded as the first classic case of an economic bubble bursting, and is a frequent reference when people talk about what other meaningless economic assets might look like a tulip bubble.</span></p><p><span>Bitcoin price rises - a tradeable currency that is not backed by any asset whatsoever, except itself - is frequently compared to the tulip bubble. </span></p><p><span><div class="KonaFilter image-container display-table float_right click-to-enlarge"><div><div class="image on-image"><a title_source="anders@andersa.com/Dronestagram" title_caption="Tulip fields in the Netherlands." class="zoomin" href="https://static-ssl.businessinsider.com/image/55ae90eb371d2277018b83e2-960/3rd-prize-category-places-tulip-fileds-by-anders@andersa.com_.jpg"><span class="sprites click-to-enlarge-icon" title="Click to enlarge"></span></a><p class="source"><span><a href="http://www.dronestagr.am/between-sassenheim-and-voorhout-the-netherlands/">anders@andersa.com/Dronestagram</a></span></p><p class="caption">Tulip fields in the Netherlands.</p></div><p></p></div></div>Wright told this story:</span></p><p style="padding-left: 30px;">Most people don't actually realise that the tulip bubble wasn't really a bubble. It was actually a reallocation of contracts, it was made from a contract to a "swaption," by changing the contract to a swaption effectively, and by allowing government officials to get out of a contract they collapsed the price.</p><p style="padding-left: 30px;">Now tulips did actually have a use back then. Tulips kill grass and one of the things they would have done was plant them around castles to keep the grass down and trees down, because they're toxic. If you had a castle back then you wanted a large area to see things. There was actually quite a value in tulips because, they sold billions of them around Europe. ... The volumes were huge. The audience was huge, it was bigger than coffee is now.</p><p>Needless to say, most people understand the tulip bubble as a period in which prices rose because they became unlinked from the underlying value of tulips. It is true, however, that the <a href="http://www.economist.com/blogs/freeexchange/2013/10/economic-history">bubble ended in part when the Dutch government converted <em>futures contracts</em> on tulip contracts into<em> options</em> on tulip futures</a>, which gave buyers an easy way to get out of an agreement to buy and vastly reduced the value of any contract.</p><p>But the bottom line for observers is, arguably, this: The guy who invented Bitcoin doesn't think the tulip bubble was a bubble.</p>    <div class="margin-top">        <h3>NOW WATCH: <a href="http://www.businessinsider.com/cyber-dust-mark-cuban-snapchat-cybersecurity-2015-12">Mark Cuban explains why downloading Snapchat is a huge mistake</a></h3>        <div>            <div>        <div class="ooyala-video-player" data-video-autoplay="false" data-video-id="FuMzJkdTpvQYH_d3c-8LMnnwzGDr7n8x" data-player-variable="ooyalapopvideo" id="ooyalaplayer_popvideo" style="width:1280px;height:720px"></div>        </div>        </div>            </div>

You Searched For "iceland bitcoin miners" and got 12 results

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