> Can't this be said about literally anything?

No. Carbon taxes would not make everything worthless.

Carbon taxes also wouldn't make Bitcoin worthless. You can easily imagine Bitcoin mines powered by solar. Many already are, in order to capitalize on the cheap energy. The article posted in the OP is specious.

Solar power isn't necessarily free of externalities though. Once you run out of roofs to install them on, you then need to use up land.

The point is that Bitcoin isn't inherently carbon positive. It's carbon positivity depends on the power source used to mine it and carbon neutral power becomes cheaper and more available every day.

Deduce just a bit more, and see that I meant you can tax literally anything until it is worthless.

I think you already knew what I meant but just wanted to nitpick.

But that is absolutely not the point, and it is not a nitpick. The real argument is that Bitcoin has negative value if you include externalities, and that is not the case for most assets.

It's not a nitpick, he's referring to Pigovian Taxes.

https://en.wikipedia.org/wiki/Pigovian_tax

It's obvious that you can tax anything by some amount to eat up the value.

He means if you tax it according to the amount of unaccounted-by-the-market negative value, it comes out negative.

Right, that's fair to say.

But the economist in OP is essentially ignoring where bitcoin actually get's it's value from and only focusing on it's electrical consumption.

Bitcoin means different things to different people. But many see it as the single best hedge against modern monetary policy.

The cost of releasing carbon into the atmosphere is there whether or not you price it into the market by use of a tax. Value is not limited to monetary value.

> Bitcoin and cryptos in general are actually worth more than $0 because people are tired of seeing their cash devalued on the whim of politicians and bankers.

How do you justify this, given that inflation is so low? (at least in the EU it's been oscillating between 0 and 2% for a very long time)

https://tradingeconomics.com/euro-area/inflation-cpi

Is this what people are so tired of? 1% inflation? I'm just trying to understand whether you're parroting "libertarian" talking points, or whether you know something I don't.

People thought all the QE during the financial crisis would cause inflation. It has and it hasn't. It has because you just need to look at how asset prices (stocks, houses, etc.) have increased. It hasn't because conveniently many governments don't include asset prices in their calculations of inflation. So although food prices for example haven't shot up and officially rates of inflation have remained low, asset prices have shot up.

It's an open secret that inflation is purposefully miscalculated.

As another commenter notes, CPI leaves out many of the most major expenses, e.g. housing.

There are estimates as high as 8% annually when you account for everything.

Is there a specific estimate/study that you'd wanna suggest to me? I've heard these claims but I've never taken the time to read the research myself, and I'm feeling like it now :-)

Thanks in advance.

inflation in common goods. lets talk about the housing market. or even proper biological food. don't see any inflation there.

First, your re-wording is doing much more than paraphrasing. There is legitimate science involved in calculating environmental impact that goes much further than just whatever tax governments implement to disincentivize using carbon.

Second, this definitely cannot be said about anything. There are plenty of products and industries that produce positive economic value _even with_ the environmental impact added.

But is it better to see your crypto devalued by some big dump? Would probably be easy for a nation state to do this if it wanted to..

All this independence from states seems totally overrated to me. They can tax your crypto. They can participate in the crypto market.. many possibilities.

If a nation-state dumps crypto then they no longer have it. If crypto was overvalued to begin with they can just buy it back later, cheaper. If it was fairly valued and they crashed it unfairly, they just lost a whole lot of crypto and don't get to play in that market anymore. Same way that speculators get flushed out of the stock market: eventually you run out of money and lose the right to play unless you start making a series of good calls.

This feedback mechanism doesn't exist when money can be created out of thin air. Then, if you run out of money, you just print more.

They can also enslave and kill you... Should they attack bitcoin, it would be acknowledging it's raison d'être.

People have been making some variation of this claim since bitcoin was $0.01.

There haven't yet been any successful attempts at destroying it, which I think is what you're implying. Not to say it can't happen, but then if we prepared for every single possible scenario we'd all be quite exhausted.

I guess the reason it didn't happen is that there is no need for it. Probably they laughing their ass off by profiting from it. Not sure how it works in the US but e.g. in Germany you have to pay taxes on crypto earnings. Sure you can just hold forever but what does it help you then?

Bitcoin exists for just over a decade now. Give governments and financial regulatory bodies some time to catch up and they will destroy it, maybe creating their own cryptocurrencies in process.

I think his point is that the externalities outweigh the actual benefits, so bitcoin is only valuable so long as a bunch of people who've never heard of it continue to be the ones who end up with the environmental liabilities.

> Bitcoin and cryptos in general are actually worth more than $0 because people are tired of seeing their cash devalued on the whim of politicians and bankers.

I bet they like it much more when the value of digital currency jumps up and down when a South African guy feels like tweeting.

> Bitcoin and cryptos in general are actually worth more than $0 because people are tired of seeing their cash devalued on the whim of politicians and bankers.

Inflation serves a purpose. The cash is devalued not on a whim, but to prevent collapse. Bitcoin indeed prevents that. Fortunately it's just a fringe market. Lets hope it stays that way.

> The cash is devalued not on a whim, but to prevent collapse.

Tell that to Venezuela.

Under that logic we should not drink because people have died of drowning and water intoxication.

> Can't this be said about literally anything?

Not at all. Lots of businesses make money by turning materials and/or labor into products. Other businesses make money solving problems for people or other businesses. However, crypto (and most of the rest of the financial sector) burn shit tons of energy, materials, time, and human effort generating wealth; wealth expressed in either bitcoin that doesn't really exist, or money that also doesn't really exist. The only real product they consistently produce is said wealth, yes, and also huge amounts of human suffering when their given business goes sideways and tanks the economy. With that in mind, maybe we ought to add said carbon taxes. I'm extremely pro killing off businesses that do nothing but generate profit on a spreadsheet for some overpaid stuffed suit and contribute nothing to humanity, nothing to the economy, solve no problems, and in general just cause the economic equivalent of "wind drag."

Mind you, my definition of "contributing" here is purposely overbroad. Coca-cola, despite producing literal sugar water, is contributing, even if that contribution is literally just sugar water that slowly kills you. It made something you can hold in your hands that people want, even if it's horrible. Hell even tobacco companies fit this definition. In my mind, financial corps and bitcoin companies are below those: using the finite entropy of the universe and the limited resources of our world to do exactly nothing.

Crypto mining produces a service, which is maintaining a ledger of payments that works in a certain way.

This specific problem — settling transactions — is an industry amounting to billions. Think of BTC like a MasterCard or Visa competitor, albeit a unique one.

Bitcoin currently consumes roughly the energy used to power one quarter of CANADA.

I'm optimistic that there is a better way to store a ledger as you describe. Perhaps a database?

Not better in terms of Bitcoin's goals of decentralization and censorship resistance...

We've decided to solve that problem by consuming very nearly the entire residential power consumption of Canada, a country of 38 million people.

We've done this with a network that can process 400k transactions per day (at $20/transaction in fees), as compared to visa, which does 150 million per day.

Surely, we can do better?

You're a software developer, so if you really believe that, get to hacking.

It's clearly an industry with huge potential if it is economically viable to spend money buying an Argentina's worth of power on it.

(Not saying I agree with the article) But that doesn't change how you do the calculus. Every good or service has some positive value to people roughly measured by price people are willing to pay for it and negative value measured roughly by the total value of the resources needed to produce. In most businesses or as an individual this is all you care about. But in addition goods and services can also have positive and negative externalities. Universal trash collection has the positive externality of reducing disease. And basically every consumer good has a negative externality of producing (some) trash.

As a whole people we should include these externalities in the value prop of services despite the fact that businesses and individuals don't because it's a cost we collectively pay.

Trash is my biggest pet-peeve example of this. As an individual I have very little power to control the amount of trash I produce because goods I buy come with so much stupid packaging that I can't give back or recycle and there is no incentive for the people in the position to affect change to do anything about it because they don't bear the cost.

In a similar fashion carbon taxes help to capture the negative externalities of energy use. And if the article is true then collecting that tax would make it so that bitcoin mining is (right now) unprofitable. This is to be expected since such a collection would be sudden increase in the cost of mining when the market has pushed margins thin. The market would adjust, transaction fees would go up, and miners would find non-carbon producing energy sources and we'd probably reach a new equilibrium that is profitable for everyone involved again.

This 'service' doesn't need to exist. It didn't solve a problem that wasn't already solved, we've had ledgers since the Bronze age, and probably before that. That's not to say that the blockchain itself isn't useful, of course it is for numerous applications, including even financial ones. However, Bitcoin as it stands today is functionally useless apart from being something that our system has decided has value, because.... waves hands.

If bitcoin went away tomorrow, a bunch of financial companies would have a lot of problems, a few big holders would be out money, and that's it. For every other human, it's Thursday.

Conversely, if gasoline didn't exist tomorrow, society would collapse.

But that doesn't seem to square with your GP post in my mind. If cigarettes went away, the world will keep moving just fine. They don't need to exist.

But you posit that people choosing cigarettes provides some value, despite the negative effects. Why is there no value than in people being able to chose a money/investment vehicle they believe to be to their benefit?

> Why is there no value than in people being able to chose a money/investment vehicle they believe to be to their benefit?

Because the only thing generated is fake money on a spreadsheet. There is no product, there is only consumption of resources to generate nothing.

For all of what's involved here, you could just pull the same amount of money out of thin air, deposit it in their IRA, and nothing changes, apart from way, WAY less energy consumption.

I think when banks used to issue private money, that was a product. People need a money instrument. In that way, Bitcoin is a (maybe bad) product.

You're right that BTC has no commodity utility outside of "being money." But I think society needs money, as much as it needs an energy source.

Gold is one object that's served the money function in the past. It has properties (fungibility, durability, scarcity, etc.) that money needs. But it's "dumb" and cumbersome, as physical objects are.

Building digital objects that serve the money function is important. One solution is the centralized ACH/banking system. But this has drawbacks --- poor scarcity, high political exposure, etc. I view BTC as simply building a competitor. You get better money properties, at the cost of more energy, etc.

Is it worth it? I don't know. But that partly depends on how the future produces energy.