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Elon Musk And The Dutch Central Bank’s Misinformation Advertising and marketing and marketing campaign

Elon Musk And The Dutch Central Bank’s Misinformation Advertising and marketing and marketing campaign

Larger than a decade after Satoshi Nakamoto blended proof of labor and bitcoin mining collectively, wrong comparisons of “energy cost per transaction” continue to be unfold by seemingly incandescent and successfully-researched other folks.

We are going to derive a method to effect unprecedented of the unfold of this story support to Alex de Vries—an files scientist who goes by the handle “Digiconomist” and is cited in nearly every anti-bitcoin energy article and op-ed in the mainstream media. There’s entirely one difficulty. Neither he, nor loads of the journalists that cite him, time and again mumble that his employer is De Nederlandsche Bank (DNB), the Dutch Central Bank, which is an repulsive opponent of bitcoin and delivery cost rails. It’s irresponsible for journalists to cite de Vries, or his work, without disclosing his conflict of curiosity. He is successfully a DNB lobbyist.

De Vries’s work for the DNB specializes in financial economic crime. In 2020 the DNB required controversial and overly aggressive KYC regulations for digital asset companies serving the Netherlands. Among a style of things, the regulation required users screen they support a watch on their withdrawal deal with. The rule of thumb was as soon as reversed final week, in court docket, after Bitonic formally complained. The DNB is moreover leading CBDC development and integration in Europe.

De Vries’ web discipline, Digiconomist, described as a “hobby project,” apparently misleads readers by failing to mumble his employment. The discipline makes use of unreasonable assumptions and faux infographics about so-called “Single Bitcoin Transaction Footprints.”

This has led others to approach up with similarly misleading transaction-primarily based comparisons to erroneously advise which altcoins use the least amount of electrical energy as a feature of utility.

In March, Bill Gates repeated this FUD, which was as soon as then echoed by the media the use of de Vries’s earn misleading files. Extra recently, Elon Musk grew to became primarily the most recent to unfold misinformation when he tweeted that Tesla would no longer get bitcoin as cost for vehicles.

“We are serious about immediate growing use of fossil fuels for Bitcoin mining and transactions, especially coal, which has the worst emissions of any gas…We are moreover having a possess a look at a style of cryptocurrencies that use <1 of Bitcoin’s energy/transaction.”

Source: Twitter

After crashing the market, which coincided with some suspicious trading activity, he followed up:

“Energy usage trend over past few months is insane https://cbeci.org

Source: Twitter

Although we can’t know what Musk was actually thinking, if Musk had bothered to read the Cambridge Bitcoin Electricity Consumption Index (CBECI’s) FAQ, then he would have learned that “energy cost per transaction” is a misconception.

The popular “energy cost per transaction” metric is regularly featured in the media and other academic studies despite having multiple issues.

First, transaction throughput (i.e. the number of transactions that the system can process) is independent of the network’s electricity consumption. Adding more mining equipment and thus increasing electricity consumption will have no impact on the number of processed transactions.

Second, a single Bitcoin transaction can contain hidden semantics that may not be immediately visible nor intelligible to observers. For instance, one transaction can include hundreds of payments to individual addresses, settle second-layer network payments (e.g. opening and closing channels in the Lightning network), or potentially represent billions of timestamped data points using open protocols such as OpenTimestamps.

Source: CBECI | FAQ

The CBECI even goes a step further, dispelling common mainstream climate narratives.

There is currently little evidence suggesting that Bitcoin directly contributes to climate change. Even when assuming that Bitcoin mining was exclusively powered by coal – a very unrealistic scenario given that a non-trivial number of facilities run exclusively on renewables – total carbon dioxide emissions would not exceed 58 million tons of CO2, which would roughly correspond to 0.17% of the world’s total emissions.

This is not to say that environmental concerns regarding Bitcoin’s electricity consumption should be disregarded. There are valid concerns that Bitcoin’s growing electricity consumption may pose a threat to achieving the United Nations Sustainable Development Goals in the future.

However, current figures should be put into perspective: available data shows that even in the worst case (i.e. mining exclusively powered by coal), Bitcoin’s environmental footprint currently remains marginal at best.

Source: CBECI | FAQ

Adam Back, creator of Proof of Work, made an effort to set the record straight:

“Doge is years unmaintained, a literal joke copy of outdated version of bitcoin with long known vulnerabilities. Factually #Bitcoin doesn’t consume incremental power per transaction. And has layer2s like lightning and @Liquid_BTC which amplify capabilities.”

Source: Twitter

It makes no difference how many transactions take place on a proof-of-work blockchain. A single bitcoin transaction could, in theory, provide final settlement for a Layer 2 channel that contained millions of transactions.

Additionally, the energy spent on mining each block isn’t just producing a transaction, it’s securing every transaction that ever came before it. That energy is securing all of the transactions that have ever happened in the history of Bitcoin — including Elon Musk’s own personal transactions as well as the preceding transactions that led to those transactions.

Michael Saylor also attempted to help clarify Musk’s misconceptions:

“The estimated electricity consumption per http://cbeci.org YTD increased 40% during the same period that the network grew 100% in assets, meaning that energy efficiency dramatically improved during this time period. #Bitcoin is becoming less energy intensive as it scales.”

Source: Twitter

Musk replied by tweeting out three URLs. The first link was about the Greenidge power plant in upstate New York, that came back online to mine bitcoin with natural gas. Nic Carter later did the research that Musk and mainstream journalists should have done in the first place:

MSM narrative:

– old coal power plants are coming back online to mine BTC

Reality:

– Greenidge plant is natgas, not coal powered (much lower carbon intensity)

– the plant is buying full carbon offsets

– Greenidge is mostly feeding the grid, powering 1000s of local homes

This is a cornerstone of the new hostile coverage around bitcoin and you may see this talking point about “decommissioned coal plants coming back online to mine BTC” hundreds of times. Only one problem: it’s completely false.

This is basically a “Saddam has yellowcake” tier misrepresentation, simply egregiously wrong.

Source: Twitter

The second link was a one-sided interview with de Vries, and the third link heavily featured de Vries as well. Again, neither of these links disclosed the fact that de Vries is employed by a central bank that opposes Bitcoin.

Musk soon pivoted his misinformed take to announce that he is supposedly “working with Doge devs” on perhaps adopting it as a green payment alternative — a dubious claim given the project has been largely abandoned. His comments only served to perpetuate the “energy per transaction” myth.

It’s not just Musk and de Vries that are perpetuating “energy per transaction” deception, as Doge supporters have been touting similarly misleading research from TRG Datacenters which claims that Litecoin uses 18.5 KWh per transaction, and Dogecoin uses 0.12 KWh per transaction.

Energy consumption has nothing to do with how many transactions are mined in a block. Energy consumption is related to coin issuance and miner profitability, not number of transactions. Nic Carter explained:

“Today, bitcoin miners earn around $50 million/day, which annualizes to around $18.2 billion in miner revenue. Fully 85% of that revenue derives not from per-transaction fees, but from the issuance of new bitcoins. This issuance process is finite: in fact, it’s 88.7% done. The rate of new coin issuance halves every four years as it approaches that 21 million limit. (These are the “halvings” you have probably heard about. Bitcoiners really love them.)

So the issuance component of miner revenue is *structurally decaying over time*. Unless you believe that the price of bitcoin is going to literally double in real terms every four years until 2140, that expenditure (and hence energy usage) is going to decline.”

Source: Nic Carter | CoinDesk

Energy required to solve complex random guesses can’t be faked, which makes proof of work an extremely fair, neutral and impenetrable physics-based approach to issue new coins and secure networks.

If you understand that energy expenditures are a function of miner profitability, and not the number of transactions, you can begin to understand that Doge’s claim of low-energy footprint per transaction is entirely misleading.

Ari Paul explained in a Q&A:

Ari Paul: …electricity isn’t used for transaction processing. It’s used to secure the network. Doge is PoW meaning it faces the same basic dynamics as Bitcoin. It uses less electricity now because it’s less secure.

Q: Because of DOGE’s unlimited supply, it price has “some” ceiling. Due to which there’s also ceiling for miner profitability beyond which miners wont add more hash rate to network which would keep the electricity consumption below a fixed maximum rate. Is this incorrect?

Ari Paul: I think that’s accurate – basically anything that depresses a POW’s token price will also depress its security and electricity usage, at least generally.

Q: Just for clarification, depressing POW token price reduces security because of inherent miner reward reduction.. i.e.: less miners -> less network scale (less electrical energy usage) -> less security. Cherish the perception?

Ari Paul: In most cases yes. Thunder of the network adjusts with hashpower. Miners are rewarded in tokens and have to support investing in hashpower (inflicting higher difficulty) as prolonged as it’s worthwhile. Larger token cost supports extra investment in hashpower.

Source: Twitter

So, if profitability and better token cost drives on-chain energy consumption, one can clearly glance that Doge would possess the a linked increased energy consumption if it had been to ever became the success Musk suggests it will be.

Satirically, Doge doesn’t resolve the issues that Musk is serious about. Digital forex miner/investor De Flandres (@Pacifica2525) further explained the misconceptions of Doge mining in a chain of tweets.

On Musk claiming he pickle up “some minute Doge mining rigs”:

There may be now not always a such thing as a “Dogecoin mining machine.” It’s called a Scrypt miner, which mines predominantly Litecoin, since Dogecoin in merge-mined with Litecoin.

Source: Twitter

On the TRG Datacenter research claiming Doge has a low “energy per transaction” footprint:

It’s all about numbers is now not always it. On reasonable, an Antminer (or equivalence) consumes 0.800 to 0.950 KwH of juice processing blocks. The numbers above are bogus. You moreover have to comprehend that “confirmations” continue indefinitely. If this day miners every mine 1 block of LTC and 1 block of Doge, then each and every will eat equal portions of energy. If the a linked miners mine 25 blocks of LTC and 10 blocks of Doge, then Doge aged less energy. The difficulty is that a Doge block is mined every minute, whereas an LTC block is mined every 2.5 minutes, so in finish, miners have to mine 2.5 extra Doge blocks than LTC, making Doge extra miner dependent. In a style of words, Doge is less miner atmosphere friendly. In expose Doge curiosity/exercise will increase, there are less empty blocks processed by scrypt miners. If this dialog was as soon as taking situation a twelve months within the past, an argument will be made that Doge makes use of less energy, attributable to there were extra empty blocks. # of blocks is now and again 1 every minute for Doge.

Source: Twitter

Dogecoin is PoW entirely attributable to Litecoin/scrypt is PoW, and that mining machine, assuming L3+ or L3++, is peaceable the use of 0.800+ KwH of juice whether it’s beneath heavy or gentle load, mining LTC and Doge collectively. So, the advise Doge makes use of less is basically a lie.

Source: Twitter

One Dogecoin block is created every minute. There may be 1 LTC block created every 2.5 minutes. Both = scrypt coins. Both are mined on the a linked machines. The extra in style Doge becomes, the higher the price, the higher the problem, the extra intense the mining, the extra energy aged.

Source: Twitter

On Musk claiming to work with Doge devs to toughen its growing old protocol:

“…Dogecoin is a merge-mined coin with Litecoin…. the a linked scrypt miners who earn the total hardware. So, who is he working with again? Switch the protocol and it ceases to be mined by Litecoin miners. They’d have to laborious-fork the coin. Dangle stress-free with that.”

Source: Twitter

“Litecoin doesn’t ‘support’ accurate Dogecoin’s blockchain, it on the total ‘owns’ Dogecoin’s blockchain, attributable to until recently, no miners would ever mine merely Doge. It was as soon as a losing proposition. Now, it also can very successfully be extra worthwhile, but it peaceable is a byproduct of Litecoin mining.”

Source: Twitter

“Piss off the Litecoin/scrypt miners and Doge takes a permanent dive.”

Source: Twitter

“Correct good fortune making an try to mine on their earn. You might will have to possess the miners, which have not been manufactured now for nearly 2 years. Those who’re accessible in are aged, on eBay, and dear, with atomize-even round 2 years.”

Source: Twitter

Furthermore, Galaxy Digital published research highlighting the heart-broken quality of the Doge network. So, why would Musk derive within the support of an unmaintained altcoin?

Q: Why now not merely make a crypto from scratch that does the total lot you wish technically and has more than a few dev make stronger and doesn’t possess high concentration of possession now not lower than initially?

Elon Musk: Handiest if Doge can’t carry out it. Colossal pain within the neck to murder yet every other one.

Source: Twitter

It’s likely that Musk is relating to the challenges that Fb confronted, when it tried to launch Libra. Tag Zuckerburg was as soon as famously hauled before Congress and stonewalled with regulation.

It’d be less of a headache to utilize Bitcoin or any a style of contemporary project. Turning Doge correct into a high velocity centralized cost coin would pickle off a laborious fork from Litecoin, which would move Doge on its earn with few Scrypt miners. Musk may perchance then murder his earn Scrypt miners and set aside them in all of his products, but that may perchance merely flip it correct into a centralized deepest cost network. One can entirely accumulate that he would reasonably meme his earn coin into existence as in opposition to going via regulators and red tape. Unnecessary to bid, he may perchance merely enforce bitcoin funds and Layer 2 applied sciences, admire every person else.

It remains to be seen if Musk is deliberately spreading misinformation or if he is littered with the Dunning-Kruger finish. Most up-to-date tweets from Musk advocate the latter, as he appears to lack the elemental working out of how decentralized techniques work or why they are compulsory. Regardless, it’s sophisticated to present what Musk’s factual motives are.

When the wrong “energy per transaction” narratives that are unfold by central bank economist de Vries, Musk and Doge supporters may perchance also even be without difficulty debunked by finding out the CBECI’s earn FAQ, it be now not sophisticated to take a look at it’s a hustle.

Vivid investment teams are ready to glance previous these wrong narratives. The Sustainable Thematic Equities team at AllianceBernstein published an informative post on Bitcoin from an ESG standpoint:

…We imagine issues referring to the high-energy depth of bitcoin mining are overstated, and the technology can play a less-acknowledged but well-known role in promoting financial inclusion. Source: AllianceBernstein | Is Bitcoin ESG Friendly for Equity Merchants?

ARK Invest moreover reiterated firm make stronger for Bitcoin:

In our see, the troubles round Bitcoin’s energy consumption are unsuitable. Contrary to consensus thinking, we imagine the impact of bitcoin mining may perchance became a obtain obvious to the atmosphere. With exact-world files, we screen how mining may perchance impact the amount of renewable energy provisioned to the grid by remodeling intermittent energy sources into baseload generation by draw of energy storage. We illustrate that renewables will be ready to meet entirely 40% of the grid’s needs within the absence of Bitcoin mining but 99% with the commercial “subsidies” linked to bitcoin mining.

Source: ARK Invest

The energy spent on Bitcoin is the unassailable physical budget for securing all of the financial network. Numerous proof-of-work projects claiming decrease energy budgets are entirely touting decrease ranges of security and much decrease ranges of use, whereas making an try to pull a immediate one on non-seasoned traders.

Musk and altcoin supporters look like unaware that it’s some distance also nearly now not attainable to breed the neutral and lovely launch of Bitcoin, in addition to its fantastic network outcomes round the sector and accurate note story over the last decade. If it had been even imaginable to breed Bitcoin’s launch, any attempted altcoin will be a decade within the support of to find vulnerabilities, a decade within the support of in network outcomes, a decade within the support of in its proven note story and a decade within the support of in proving its immutability as sound cash. It may perchance truly lack the credibility compulsory to became a accurate and world reserve asset.

Proof of stake and a style of newly developed protocols are peaceable unproven experiments that can require years of sorting out and scrutiny, which have a tendency to lack distribution and launch fairness. These experiments are now not the types of protocols all of the sector needs backing up the following world reserve asset. No regarded as one of their factual thoughts chooses to possess one’s existence savings, or a company’s treasury, guarded by a low security budget according to trust. Institutions and other folks need the most security budget, with a shut to-zero likelihood of failure, for their treasured and laborious-earned existence savings.

Bitcoin gives security that no a style of asset can by bridging the physical and virtual world with proof of labor. It’s primarily the most accurate energy budget on the face of the planet, backed by physics, and price every joule that flows into it.

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1 comment

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