12.23.13

The perfect ‘money’ for our time (continued)

Posted in Culture of Lickspittle at 10:00 am by George Smith

Today, from Krugman, bitcoin has put a place in Iceland, the name of which you can’t pronounce, on the map:

The second money pit is a lot stranger: the Bitcoin mine in Reykjanesbaer, Iceland. Bitcoin is a digital currency that has value because … well, it’s hard to say exactly why, but for the time being at least people are willing to buy it because they believe other people will be willing to buy it. It is, by design, a kind of virtual gold. And like gold, it can be mined: you can create new bitcoins, but only by solving very complex mathematical problems that require both a lot of computing power and a lot of electricity to run the computers.

Hence the location in Iceland, which has cheap electricity from hydropower and an abundance of cold air to cool those furiously churning machines. Even so, a lot of real resources are being used to create virtual objects with no clear use …

Keynes would, I think, have been sardonically amused to learn how little has changed in the past three generations. Public spending to fight unemployment is still anathema; miners are still spoiling the landscape to add to idle hoards of gold. (Keynes dubbed the gold standard a “barbarous relic.”) Bitcoin just adds to the joke. Gold, after all, has at least some real uses, e.g., to fill cavities; but now we’re burning up resources to create “virtual gold” that consists of nothing but strings of digits.

A money for tech sociopaths and miscellaneous greed heads spouting rubbish about destroying the tyranny of central governments and putting money with alleged real value back in the hands of people, but only a small certain kind.


And here’s the example of the special everyman quality of bitcoin, the Brobdingnagian digital mining operation:

To get [to the bitcoin mine in Iceland], you pass through a fortified gate and enter a featureless yellow building. After checking in with a guard behind bulletproof glass, you face four more security checkpoints, including a so-called man trap that allows passage only after the door behind you has shut. This brings you to the center of the operation, a fluorescent-lit room with more than 100 whirring silver computers …

“What we have here are money-printing machines,” said Emmanuel Abiodun, 31, founder of the company that built the Iceland installation, shouting above the din of the computers. “We cannot risk that anyone will get to them.”

Mr. Abiodun is one of a number of entrepreneurs who have rushed, gold-fever style, into large-scale Bitcoin mining operations in just the last few months. All of these people are making enormous bets that Bitcoin will not collapse, as it has threatened to do several times.

The story informs the Icelandic bitcoin-mining company will also open a branch in Dallas, Texas. And, boy howdy, everyone knows how cheap and cold it is in Texas in the summertime.


Bitcoin — from the archives.

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