In fact, the Bitcoin Energy Consumption Index shows that power required for bitcoin mining globally is close to eclipsing the consumption of Austria.
It’s why so many miners have moved to Iceland. The climate is moderate. Hydro power is in full swing. Miners can mine virtual currencies to their heart’s content.
But can this last for much longer?
The cost to mine bitcoin rises rapidly because the equations which computers need to solve to create new bitcoins become more complex.
What you end up with in time are huge complexes filled with computers, servers and fans.
‘In 2018, bitcoin is on track to consume more energy than Denmark,’ Oak Ridge Institute’s Max Krause said.
‘We wanted to spread awareness about the potential environmental costs for mining cryptocurrencies. Just because you are creating a digital product, that doesn’t mean it does not consume a large amount of energy to make it.’
Yet this is something I couldn’t care less about.
What’s far more important is the underlying technology of cryptocurrencies (the blockchain) and its continual improvement. God knows the people of China have been waiting decades for something like this…
Why China needs blockchain
It’s the latest industry to come under the attack of China’s Communist Party. If you’re unfamiliar with how the industry works, before any game can be released, it needs to get the OK from policy makers.
That way, the commies can make sure nothing unsavoury makes it into these games. For months, policy makers have approved zero games.
There is a huge hold-up as China tries to push their younger generation away from games and towards computer engineering or artificial intelligence.
China doesn’t want their future generation hooked on video games. They want them pursuing the socialist Made in China 2025 plan.
But how do you get youths to stop playing existing games already out there? Verification might be one way.
The semi-government controlled online gaming firm, Tencent Holdings Ltd [HKG:0700], now requires gamers to verify their identity against police databases.
From South China Morning Post (SCMP):
‘The company (Tencent) last month made it mandatory for players in nine Chinese cities including Beijing to verify their age to log into its popular Honour of Kings mobile game. Under the new plan, Tencent will roll out the mandatory verification to another nine of its most popular games before introducing them for all of its games from next year.’
To Chinese officials, online gaming is the new opium. SCMP continues:
‘Schoolchildren in China are taught that foreign powers, in a bid to tilt the balance of trade, introduced opium to the masses in the 19th century, damaging the health of millions in a period that the ruling Communist Party has referred to as China’s “century of humiliation.”’
But the indoctrination and control doesn’t stop there. It’s just one part of China’s social credit system.
China has vast surveillance systems that track every one of their 1.4 billion citizens.
‘From using facial recognition to name and shame jaywalkers, to forcing people to download apps that can access all the photos on their smartphones,’ Business Insider writes.
‘The growth of China’s surveillance technology comes as the state rolls out an enormous “social credit system” that ranks citizens based on their behaviour, and doles out rewards and punishments depending on their scores.
‘Not much is known so far about how China will monitor its citizens for the social credit system, but some of the technology currently available in China could well be used in the system. Tech companies in China are required to share data with the government upon request.’
The worst part is, China thinks they’ve done nothing wrong. The commies in China think it’s a good thing to manage society in this way.
There are no individuals in a place like China. Only the collective.
Children do not belong to their mother and father. They belong to the state. And what the state believes is best for the collective takes precedent over any individual — if that individual is anyone other than Xi Jinping, of course.
This is why places like China need public blockchains: decentralised ways to keep records that are outside of the government’s control.
The benefit of a public blockchain for China
In a blockchain world, you cannot hide. But you’re also anonymous. It’s the best of both worlds: transparency and privacy.
In fact, if I was to transfer you a million dollars via the blockchain, everyone could see that a million dollars has been transferred from one account to another. They could even see our specific accounts.
But no one would know that you and I are behind those accounts.
In a place like China, a public blockchain (free from government control) would be a godsend. People wouldn’t have to look over their shoulder every five minutes. They wouldn’t have to weigh up whether purchasing something online would affect their social credit score.
I find it hard to imagine a China ridding themselves of their red disease. Hopefully time can perform a miracle on the Middle Kingdom. Maybe it could start with a public blockchain and snowball from there.
Better dead than red,
Editor, Money Morning
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