12 ms·

How Iran Uses Bitcoin Mining to Evade Sanctions and “Export” Oil

232 points by dyslexit 5y ago

1cvmask 5y ago
The petro dollar is enforced by might and invasions. Nixon created it when he decided to leave the gold standard after France demanded physical gold as payments. Iran and other countries under US sanctions use alternatives including barter. Bitcoin can just be one of those tools. But bitcoin mining is more a function of cheap electricity and high bitcoin prices. Electricity is cheap in Iran. 4.5 percent of bitcoin mining is negligible given the context of the sanctions. One would expect it to be at say 20 percent as their is an American embargo on the country. This just seems to be more of a click bait article for self promotion or company promotion.
- sig-reduction 5y ago
  I've always wanted to understand the geopolitics of oil and gas. Despite much interested reading, I can never quite figure out what's going on. One of the more interesting quote's I've encountered along the way, "The foreign tax rates of U.S. oil multinationals fell significantly after the first Gulf War, during which the United States intervened to protect Kuwait, a major oil producer. Although it is not possible to know for sure what caused this decline, a possible interpretation of the fall in taxes collected by oil-producing countries is that they reflect a return on military protection granted by the United States to oil-producing States." Figure 2 on page 20 has the discontinuity. https://gabriel-zucman.eu/files/WrightZucman2018.pdf https://gabriel-zucman.eu/files/WrightZucman2018.pdf
  - DSingularity 5y ago
    I think that is an important point but tangential IMO. The question here is geopolitics of the dollar. Notice, when the us had deep music-gonna-stop level problems in its economy it prints a shit-ton of dollars. Which other country in the world can do this? Nobody. And it will stay this way until someone has a navy as powerful as the US.
    - woodpanel 5y ago
      * it prints a shit-ton of dollars. Which other country in the world can do this?* Currently, there isn't a country that isn't doing this. But I agree, when the music is gonna stop globally the US can print the longest.
      - himlion 5y ago
        There is a significant difference, those countries print their own currency, but only the USA can print US dollars.
    - elcritch 5y ago
      The US’es navy is arguably much more of a result of our economy than the other way around. Of course there are synchronistic effects. The petro-dollar is what let’s the Fed print money with abandon beyond what other nations could. The petro-dollar is protected by American naval power. So it’s a feedback cycle. In a fashion, the US printing dollars lowers the value of a dollar which effectively taxes the rest of the world by lowering the value of their dollar denominated assets. Particularly oil. Still it’s an odd system as the US is ultimately on the hook for that debt, to US federal debt holders who are still majority Americans. It’ll be interesting to see how post-oil world economy will handle it. Possibly more serious large scale wars between regional powers.
      - fnord77 5y ago
        the US pays 0 or close to 0 interest on that debt.
        elcritch 5y ago
        The first link on Google says the 2021 interest payments will be $378 billion on $27 trillion in debt. That’s about a 1.4% rate. Not a bad rate, but still it’s interest. 1: https://www.thebalance.com/interest-on-the-national-debt-4119024 https://www.thebalance.com/interest-on-the-national-debt-411...
      - 5y ago
  - patrickk 5y ago
    https://www.bloomberg.com/news/features/2016-05-30/the-untold-story-behind-saudi-arabia-s-41-year-u-s-debt-secret https://www.bloomberg.com/news/features/2016-05-30/the-untol... This article explains the link between Saudi Arabia and the US. It explains a lot about the relationship that exists despite so much chaos and turmoil. As they say, money talks and bullshit walks.
  - ultrastable 5y ago
    You should check out Carbon Democracy by Timothy Mitchell if you haven't yet
- sleavey 5y ago
  > The petro dollar is enforced by might and invasions. Nixon created it when he decided to leave the gold standard after France demanded physical gold as payments. This aspect was not clear to me until I read The Bitcoin Standard by Saifedean Ammous, the first two thirds of which is more of a history of money than pro-Bitcoin propaganda. There he argues that moving off the gold standard was a bad idea in many ways apparently unrelated to money. And of course there's this famous website: https://wtfhappenedin1971.com/ https://wtfhappenedin1971.com/. For reference, 1971 was when Nixon decoupled the US dollar from gold.
  - throw0101a 5y ago
    > There he argues that moving off the gold standard was a bad idea in many ways apparently unrelated to money. See Money: The True Story of a Made-Up Thing by Jacob Goldstein (of NPR's Planet Money): * https://bookshop.org/books/money-the-true-story-of-a-made-up-thing/9780316417198 https://bookshop.org/books/money-the-true-story-of-a-made-up... * https://en.wikipedia.org/wiki/Jacob_Goldstein https://en.wikipedia.org/wiki/Jacob_Goldstein From what I've read on the topic, gold (and 'hard money' in general) is generally not a good in most circumstances. Yes, if your mint/central bank takes orders from the government to create more money it can lead to bad things, but generally that disaster only needs to happen once before everyone realizes how bad an idea it is and probably never does it again. Recommend the book. Debt: The First 5,000 Years is also worth checking out: * https://en.wikipedia.org/wiki/Debt:_The_First_5000_Years https://en.wikipedia.org/wiki/Debt:_The_First_5000_Years
    - logicchains 5y ago
      Did you read the link the person you're replying to posted? The empirical evidence there suggests that moving away from hard money has been terrible for the average American, and the shrinking middle class is exactly what's predicted by proponents of sound money. >but generally that disaster only needs to happen once before everyone realizes how bad an idea it is and probably never does it again. That clearly isn't the case or else no country would have experienced hyperinflation after the fall of Rome.
sva_ 5y ago
> For example, blockchain analytics solutions such as those provided by Elliptic can be used by regulated financial institutions to detect and block cryptoasset deposits from Iran-based entities including miners. Techniques can also be employed to ensure that transaction fees are not paid to miners in high risk jurisdictions. Interesting. It seems like they're basically saying that mined blocks should be accepted based on the location of the one submitting it. This whole article seems to be a sales pitch. Lets see how decentralized and unregulated Bitcoin really is. >This level of Bitcoin mining would currently bring in annualised revenues of close to $1 billion. I wondered how they came up with that number. Miners currently seem to earn around $30 million per day[0]. 30*365*0.045 = ~500 mil. Seems like they conveniently used the highest recent rewards of $60mil per day. The statement just seems sensationalist at best, all things considered. [0] https://bitcoinvisuals.com/chain-block-reward-day https://bitcoinvisuals.com/chain-block-reward-day
- viraptor 5y ago
  > It seems like they're basically saying that mined blocks should be accepted based on the location of the one submitting it. That's silly. Mining doesn't use a lot of bandwidth, so setting up a tunnel to mask the origin of the block would be trivial. The moment Iran's blocked, why wouldn't miners do that?
- vbezhenar 5y ago
  > Interesting. It seems like they're basically saying that mined blocks should be accepted based on the location of the one submitting it. This whole article seems to be a sales pitch. Lets see how decentralized and unregulated Bitcoin really is. This implies forking the blockchain. So some clients will use "curated" blockchain. I don't think that this fork will be popular.
- hanniabu 5y ago
  > can be used by regulated financial institutions to detect and block cryptoasset deposits They're not talking about censoring/forking/manipulating the chain. They're talking about centralized financial services built on top of bitcoin blocking coin that is linked to Iran.
quanto 5y ago
> The electricity being used by miners in Iran would require the equivalent of approximately 10 million barrels of crude oil each year to generate - around 4% of total Iranian oil exports in 2020. 4% of the post-sanction exports. It seems that the sanctions "evasion" does not have an impact on the efficacy of the sanction. Instead of seeing Iranian mining boom as some tech-enabled sanction workaround, I see it as just that -- a boom just because electricity is cheap.
- dragonelite 5y ago
  Chinese government is clamping down on their domestic miners. Given how Iran and China are quiet close maybe those miners can get some good energy deals. Also means the Russia, Iran and China(coalition, partnership?) crypto hashing power is also more decentralized.
ajb 5y ago
Reading this, it occurs to me that laundering operations seem to represent a fundamental threat to bitcoin, as follows: - legitimate miners should be willing to spend $1 mining to gain $1+delta - launderers should be willing to spend $1 (dirty) mining to get $1-delta (laundered) So launderers should outcompete legitimate miners.
- maxqin1 5y ago
  The picture is becoming clearer. Incentive theory will cause governments to put an end to at least POW blockchains per launderers. POS will be trickier for launderers but it won't be impossible.
- bottled_poe 5y ago
  This is a really good point
- throwaway98797 5y ago
  let me tell you a story about your local restaurant… or laundry mat… or car wash… or…
- b-x 5y ago
  What is your definition of "Legitimate"? Is it just what the US lawmakers define as lawful? In such case, we've witnessed many instances where the US imposes sanctions on various entities with no relevant excuses but to oppress those who disagree with it. One recent example that I can think of is when the US imposed sanctions on members of the ICC [1]. [1] https://www.bbc.com/news/world-us-canada-54003527 https://www.bbc.com/news/world-us-canada-54003527
  - matthewdgreen 5y ago
    “Legitimate” in this case refers to any miner who is mining honestly and is simply motivated by profits from the block reward and fees. If we ignore potential price increases and inefficiencies, an ideal mining market should see block production costs increase until the profit margin for such miners is close to zero. But miners with “ulterior motives” can extract more benefit from mining, and so can mine profitably even when production costs are very close to rewards. This means in theory such parties are likely to dominate the mining network. “Ulterior motives” includes a lot of things. It definitely includes money laundering (see Iran and China) but it also includes people who mine so they can conduct 51% and MEV attacks on the network. On the positive side it may include pseudo-altruistic types such as major currency holders, who are willing to mine at a loss in order to support the currency’s value. The thing all of these parties have in common is that none of them are incentivized to mine honestly solely because of the intrinsic profits involved in mining: your hope is that their ulterior motive is compatible with honest behavior. When that isn’t born out, your network runs into trouble. * Obviously in the real world there are tons of capital expenses and prices fluctuate wildly, so this model is loaded with inefficiency that can allow some folks to make money on mining as a business in and of itself. But PoS systems will have fewer such inefficiencies.
Synaesthesia 5y ago
What's wrong with Iran exporting oil? Why can't Iran export oil? The level of economic strangulation the US can achieve over countries is unprecedented. And they're often just arbitrarily punishing countries.
- nix23 5y ago
  They are part of the "Axis of Evil" TM by George W. Bush
  - andy_ppp 5y ago
    To be fair they have kidnapped quite a few British/Iranian citizens including Nazanin Zaghari-Ratcliffe, they are effectively a religious dictatorship and a majority of their own people hate their government who I think have banned dancing in public and have arrested people for making TikTok videos, amongst more serious crimes. I’m not exactly sure the Iranian government are particularly nice people.
    - nix23 5y ago
      >dictatorship and a majority Brought (unwillingly) into power by the US once more: https://en.wikipedia.org/wiki/1953_Iranian_coup_d%27%C3%A9tat#United_States'_role https://en.wikipedia.org/wiki/1953_Iranian_coup_d%27%C3%A9ta... >I’m not exactly sure the Iranian government are particularly nice people. One could say that about the CIA and the US-Government too.
    - GordonS 5y ago
      Keep in mind that there is a huge Western media and government bias against Iran, in the US in particular. I'm not saying the Iranian government doesn't do bad things - it absolutely does, though you could (easily) argue that the US has done far worse. Hell, you can also (again, easily) argue that the US and UK are largely responsible for many of the past wrongs of Iranian governments. As a singular anecdote from 21 years back, I spent a couple of weeks in Iran way back in 2000 (my father was working there as a geologist for an oil company and I joined him during the summer holidays) - things seemed very different than I'd been led to believe. I felt completely safe wandering Tehran alone, and everyone I came across seemed extremely friendly and curious. They seemed to know how their country was portrayed outside of Iran, and wanted to show me otherwise. People talked freely about politics too, expressing likes and dislikes just like any western nation. And the food, my word the food...
ceilingcorner 5y ago
When people say "Bitcoin uses so much energy, it must be shut down!" I like to remind them of a simple fact: the amount of energy and military resources used to ensure the petrodollar's global dominance. It's not even a comparison.
- deleted 5y ago
  [deleted]
- lasagnaphil 5y ago
  I agree with your criticism on the current petrodollar system, but I still don't understand how Bitcoin could replace it. I've yet to see a crypto enthusiast who seems to really think about the implications about world trade purely done in Bitcoin. And the "there was the gold standard back then, it's going to be similar" argument doesn't work, it has historically ended in total disaster and countries which abandoned the system sooner has recovered from the Great Depression more quickly. Right now a Bancor system that's designed to balance imports and exports between countries seems like the more convincing route to achieve peace while continuing global trade. Any ideas?
  - logicchains 5y ago
    >And the "there was the gold standard back then, it's going to be similar" argument doesn't work, it has historically ended in total disaster and countries which abandoned the system sooner has recovered from the Great Depression more quickly. Historically prior to the 1900s pretty much everywhere was on a gold or silver standard of some sort.
- imtringued 5y ago
  That military protects more than the dollar. It also protects all the real resources that give the USD value. From a practical perspective Bitcoin is effectively a virtual, self declared nation state but the only thing that exists within that nation is Bitcoin itself. Thus military expenses in the form of Bitcoin mining only cover a small subset of protection offered by conventional military. Because of this, most Bitcoin proponents are extremely narrow minded, they think the currency equates the entire nation, therefore the USD is equivalent to the entire US and only protecting the USD is equivalent to protecting the entire nation. Every day people run into the same problem with rent control. They believe there are no real resource constraints represented by the price, therefore they believe changing the price alone is enough to solve the problem. Yet they never realize that prices are just information used to allocate scarce real resources. If information is manipulated and no longer reflects reality then it has become a lie and therefore serves nobody except the one who told the lie. Okay now that we have established that currencies are information that reflect the allocation of real resources, then what real resources does Bitcoin allocate? It allocates a share of real resources around the world based on the people who bought and sold it. The irony is that these real resources are being protected by their respective governments, thus the existence of the US military (and all other militaries) is an essential part of Bitcoin's current valuation.
tehwebguy 5y ago
Alternate headline: How Iran manages to maintain some semblance of an economy despite immoral sanctions. Not a crypto person at all but I do remember when the last US president ripped up the Iran deal which afforded the International Atomic Energy Agency the right to inspect their operations and replaced it with... nothing. I think this is proof enough that all of the talk about Iran being a threat (to the US? to the world?) is vastly over hyped. Now we’ve got warhawks, oil companies & the finance industry all working together with Iran as the bogeyman driving all their policies. Watch for Yellen or congress to drop some “bitcoin supports Iran” talking points any minute now.
- rjzzleep 5y ago
  I think what's actually interesting about it is that Iran actually forbids crypto for local currency transactions, because they don't want people to bypass the local currency. So it's one rule for the government and another for the people. But yes, I agree with most of what you said, also what Jellen said about global corp tax is kind of messed up. They don't want to go after their own big corps, but rather control the rest of the world. As long as the fiscal years start at different times, they can still shuffle money around as they please, but nobody actually dares touching the US corps in the US.
  - almost_usual 5y ago
    Bitcoin will never be true decentralization because the real world runs on centralized violence and power grabs.
    - rjzzleep 5y ago
      It can't be decentralized to begin with, because whoever has more money can run more mining and whoever mines more has more power in the network. It's still more about rich hording power. On the flipside it may just be a little bit more distributed and accessible than the current prevalent system.
      - 5y ago
gnfargbl 5y ago
Prior to the re-imposition of US sanctions, Iran was producing around 1400 million barrels of oil per year and exporting around 800 [1]. The article says that Iranian Bitcoin mining is currently consuming the equivalent of around 10 million barrels per year. At a consumption rate of ~1% of the potential exportable amount, this doesn't seem like a particularly significant evasion of sanctions. [1] https://www.bbc.com/news/world-middle-east-48119109 https://www.bbc.com/news/world-middle-east-48119109
- asddubs 5y ago
  political implications aside, it still seems so crazy that here we're just burning 10 million barrels a year on doing nothing useful at all
  - almost_usual 5y ago
    Something something Bitcoin solves all world problems, brings world peace etc.
  - logicchains 5y ago
    >political implications aside, it still seems so crazy that here we're just burning 10 million barrels a year on doing nothing useful at all The Iranian people impoverished by sanctions would beg to differ (no pun intended).
    - asddubs 5y ago
      hence "political implications aside". this could also be solved by the US lifting their unjust sanctions
      - lifty 5y ago
        If only we could all get along and sing Kumbaya together, we could solve all the world problems. In this context of human conflict and geopolitical power struggles, does bitcoin make any sense to you?
josu 5y ago
Before reading the article, keep in mind that Elliptic makes money by scaring governments: either selling their software to them directly, or through regulation that is passed forcing companies to hire them.
nathias 5y ago
Gosh golly, it's as if it was made to be a tool against the petrodollar ...
- almost_usual 5y ago
  That sheds 30% of its value when Elon Musk tweets.
  - deleted 5y ago
    [deleted]
newaccount2021 5y ago
news is never accidental. the subtext here is obvious: dear normal people, Uncle Sam will not tolerate a competitor to the USD. get out before we criminalize crypto.
deleted 5y ago
[deleted]
lvl100 5y ago
How Drug Cartels Use Bitcoin Mining to…
variable11 5y ago
The elites are out in force against Bitcoin, using all the same tired cliches they use for everything: "racism, Iran, Russia, climate change."
uberdru 5y ago
This must be a riff on the article I read a couple of months ago that described Iceland's aluminum industry as a means of exporting its geothermal energy. It's the only plausible argument I have seen for Bitcoin's intrinsic value.
lanevorockz 5y ago
I think the environment is way more important in terms of problems with BitCoin. Evading Sanctions are way easier than that. Give a couple of stacks to Hunter Biden and you are good to go.
xbar 5y ago
Comments this morning seem very aggressive-defensive. How about a different takeway: cryptocurrency defeats current international sanction tools. Whatever your feelings about US/Iran or your feelings about Bitcoin/Climate Change, sanctions have been an effective peace-time tool for the UN to bring countries to the negotiating table. Perfectly effective? No. Security Council politically motivated? Yes. Better than war for the citizens of all countries? Yes. Will Bitcoin lead to more war as a result of weakening the power of sanctions? I wouldn't hazard a guess. But I didn't see this possibility coming.
- Udik 5y ago
  > cryptocurrency defeats current international sanction tools Yes, exactly. They (in part) defeat an act of unilateral violence, one that is very cheap for the perpetrator, from one country against another. Which seems a very good thing.
- StanislavPetrov 5y ago
  >cryptocurrency defeats current international sanction tools. If one values international law, or the, "international order" (as Secretary of State Blinken put it, without irony), then a bright line needs be drawn between, "international sanction tools" that are used by the UN and the unilateral sanctions issued by the US. >Will Bitcoin lead to more war as a result of weakening the power of sanctions? Bellicose nations have always issued demands to other sovereign nations backed by the threat of illegal wars of aggression. Will the ability of targeted nations to avoid being starved to death via the use of bitcoin lead to more war? Possibly, but is the problem there really bitcoin, or rogue nations who consider themselves above international law?
kwdc 5y ago
No mention about what happens when China lets Iran purchase oil using their Chia crypto. Interesting omission.
m3kw9 5y ago
10second read+summary: Iran burns oil to mine Bitcoin
- timbit42 5y ago
  How does that help them export their oil?
  - Udik 5y ago
    It doesn't but it allows them to export its value, which is the only thing everyone cares about.
intricatedetail 5y ago
Can these coins be detected and blacklisted? Pretty pointless to do something like this on BTC.
slumdev 5y ago
> Thousands of unlicensed mining farms have subsequently been identified and shut down - including in mosques, which receive free electricity. So...if I open a mosque and mine Ethereum instead of Bitcoin, can I still get some of that free electricity?
74d-fe6-2c6 5y ago
I bet this is why Bitcoin is taking a big hit at the moment. Yes, there are many good reasons for that to happen and maybe it's for the better. But I would put my mouth where the money is that this is the actual reason. It's probably an attack organized by US/Israel against an income source of Iran.
tudorw 5y ago
It's an advert no? "blockchain analytics solutions such as those provided by Elliptic"
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3maj 5y ago
I have been waiting for the media to start to spin bitcoin as something only terrorists and criminals use. Wait for them to start pushing the FED coins as "safe alternatives". It's been a good ride.
CryptoPunk 5y ago
Elliptic is a cryptocurrency surveillance firm. It stands to see significantly more client contracts if cryptocurrency exchanges are forced by governments to engage in extreme transaction filtering. That the harm this would do to cryptocurrency fungibility/utility would vastly outweigh any benefit from being able to more effectively starve Iran and Venezuela of funds - if this can even be called beneficial - is incidental to the impact on Elliptic's bottom line.

232 points by dyslexit 5y ago

The petro dollar is enforced by might and invasions. Nixon created it when he decided to leave the gold standard after France demanded physical gold as payments. Iran and other countries under US sanctions use alternatives including barter. Bitcoin can just be one of those tools. But bitcoin mining is more a function of cheap electricity and high bitcoin prices. Electricity is cheap in Iran. 4.5 percent of bitcoin mining is negligible given the context of the sanctions. One would expect it to be at say 20 percent as their is an American embargo on the country. This just seems to be more of a click bait article for self promotion or company promotion.

sig-reduction 5y ago
I've always wanted to understand the geopolitics of oil and gas. Despite much interested reading, I can never quite figure out what's going on. One of the more interesting quote's I've encountered along the way, "The foreign tax rates of U.S. oil multinationals fell significantly after the first Gulf War, during which the United States intervened to protect Kuwait, a major oil producer. Although it is not possible to know for sure what caused this decline, a possible interpretation of the fall in taxes collected by oil-producing countries is that they reflect a return on military protection granted by the United States to oil-producing States." Figure 2 on page 20 has the discontinuity. https://gabriel-zucman.eu/files/WrightZucman2018.pdf https://gabriel-zucman.eu/files/WrightZucman2018.pdf
- DSingularity 5y ago
  I think that is an important point but tangential IMO. The question here is geopolitics of the dollar. Notice, when the us had deep music-gonna-stop level problems in its economy it prints a shit-ton of dollars. Which other country in the world can do this? Nobody. And it will stay this way until someone has a navy as powerful as the US.
  - woodpanel 5y ago
    * it prints a shit-ton of dollars. Which other country in the world can do this?* Currently, there isn't a country that isn't doing this. But I agree, when the music is gonna stop globally the US can print the longest.
    - himlion 5y ago
      There is a significant difference, those countries print their own currency, but only the USA can print US dollars.
  - elcritch 5y ago
    The US’es navy is arguably much more of a result of our economy than the other way around. Of course there are synchronistic effects. The petro-dollar is what let’s the Fed print money with abandon beyond what other nations could. The petro-dollar is protected by American naval power. So it’s a feedback cycle. In a fashion, the US printing dollars lowers the value of a dollar which effectively taxes the rest of the world by lowering the value of their dollar denominated assets. Particularly oil. Still it’s an odd system as the US is ultimately on the hook for that debt, to US federal debt holders who are still majority Americans. It’ll be interesting to see how post-oil world economy will handle it. Possibly more serious large scale wars between regional powers.
    - fnord77 5y ago
      the US pays 0 or close to 0 interest on that debt.
      - elcritch 5y ago
        The first link on Google says the 2021 interest payments will be $378 billion on $27 trillion in debt. That’s about a 1.4% rate. Not a bad rate, but still it’s interest. 1: https://www.thebalance.com/interest-on-the-national-debt-4119024 https://www.thebalance.com/interest-on-the-national-debt-411...
    - 5y ago
- patrickk 5y ago
  https://www.bloomberg.com/news/features/2016-05-30/the-untold-story-behind-saudi-arabia-s-41-year-u-s-debt-secret https://www.bloomberg.com/news/features/2016-05-30/the-untol... This article explains the link between Saudi Arabia and the US. It explains a lot about the relationship that exists despite so much chaos and turmoil. As they say, money talks and bullshit walks.
- ultrastable 5y ago
  You should check out Carbon Democracy by Timothy Mitchell if you haven't yet
sleavey 5y ago
> The petro dollar is enforced by might and invasions. Nixon created it when he decided to leave the gold standard after France demanded physical gold as payments. This aspect was not clear to me until I read The Bitcoin Standard by Saifedean Ammous, the first two thirds of which is more of a history of money than pro-Bitcoin propaganda. There he argues that moving off the gold standard was a bad idea in many ways apparently unrelated to money. And of course there's this famous website: https://wtfhappenedin1971.com/ https://wtfhappenedin1971.com/. For reference, 1971 was when Nixon decoupled the US dollar from gold.
- throw0101a 5y ago
  > There he argues that moving off the gold standard was a bad idea in many ways apparently unrelated to money. See Money: The True Story of a Made-Up Thing by Jacob Goldstein (of NPR's Planet Money): * https://bookshop.org/books/money-the-true-story-of-a-made-up-thing/9780316417198 https://bookshop.org/books/money-the-true-story-of-a-made-up... * https://en.wikipedia.org/wiki/Jacob_Goldstein https://en.wikipedia.org/wiki/Jacob_Goldstein From what I've read on the topic, gold (and 'hard money' in general) is generally not a good in most circumstances. Yes, if your mint/central bank takes orders from the government to create more money it can lead to bad things, but generally that disaster only needs to happen once before everyone realizes how bad an idea it is and probably never does it again. Recommend the book. Debt: The First 5,000 Years is also worth checking out: * https://en.wikipedia.org/wiki/Debt:_The_First_5000_Years https://en.wikipedia.org/wiki/Debt:_The_First_5000_Years
  - logicchains 5y ago
    Did you read the link the person you're replying to posted? The empirical evidence there suggests that moving away from hard money has been terrible for the average American, and the shrinking middle class is exactly what's predicted by proponents of sound money. >but generally that disaster only needs to happen once before everyone realizes how bad an idea it is and probably never does it again. That clearly isn't the case or else no country would have experienced hyperinflation after the fall of Rome.

sva_ 5y ago

> For example, blockchain analytics solutions such as those provided by Elliptic can be used by regulated financial institutions to detect and block cryptoasset deposits from Iran-based entities including miners. Techniques can also be employed to ensure that transaction fees are not paid to miners in high risk jurisdictions. Interesting. It seems like they're basically saying that mined blocks should be accepted based on the location of the one submitting it. This whole article seems to be a sales pitch. Lets see how decentralized and unregulated Bitcoin really is. >This level of Bitcoin mining would currently bring in annualised revenues of close to $1 billion. I wondered how they came up with that number. Miners currently seem to earn around $30 million per day[0]. 30*365*0.045 = ~500 mil. Seems like they conveniently used the highest recent rewards of $60mil per day. The statement just seems sensationalist at best, all things considered. [0] https://bitcoinvisuals.com/chain-block-reward-day https://bitcoinvisuals.com/chain-block-reward-day

viraptor 5y ago
> It seems like they're basically saying that mined blocks should be accepted based on the location of the one submitting it. That's silly. Mining doesn't use a lot of bandwidth, so setting up a tunnel to mask the origin of the block would be trivial. The moment Iran's blocked, why wouldn't miners do that?
vbezhenar 5y ago
> Interesting. It seems like they're basically saying that mined blocks should be accepted based on the location of the one submitting it. This whole article seems to be a sales pitch. Lets see how decentralized and unregulated Bitcoin really is. This implies forking the blockchain. So some clients will use "curated" blockchain. I don't think that this fork will be popular.
hanniabu 5y ago
> can be used by regulated financial institutions to detect and block cryptoasset deposits They're not talking about censoring/forking/manipulating the chain. They're talking about centralized financial services built on top of bitcoin blocking coin that is linked to Iran.

quanto 5y ago

> The electricity being used by miners in Iran would require the equivalent of approximately 10 million barrels of crude oil each year to generate - around 4% of total Iranian oil exports in 2020. 4% of the post-sanction exports. It seems that the sanctions "evasion" does not have an impact on the efficacy of the sanction. Instead of seeing Iranian mining boom as some tech-enabled sanction workaround, I see it as just that -- a boom just because electricity is cheap.

dragonelite 5y ago
Chinese government is clamping down on their domestic miners. Given how Iran and China are quiet close maybe those miners can get some good energy deals. Also means the Russia, Iran and China(coalition, partnership?) crypto hashing power is also more decentralized.

ajb 5y ago

Reading this, it occurs to me that laundering operations seem to represent a fundamental threat to bitcoin, as follows: - legitimate miners should be willing to spend $1 mining to gain $1+delta - launderers should be willing to spend $1 (dirty) mining to get $1-delta (laundered) So launderers should outcompete legitimate miners.

maxqin1 5y ago
The picture is becoming clearer. Incentive theory will cause governments to put an end to at least POW blockchains per launderers. POS will be trickier for launderers but it won't be impossible.
bottled_poe 5y ago
This is a really good point
throwaway98797 5y ago
let me tell you a story about your local restaurant… or laundry mat… or car wash… or…
b-x 5y ago
What is your definition of "Legitimate"? Is it just what the US lawmakers define as lawful? In such case, we've witnessed many instances where the US imposes sanctions on various entities with no relevant excuses but to oppress those who disagree with it. One recent example that I can think of is when the US imposed sanctions on members of the ICC [1]. [1] https://www.bbc.com/news/world-us-canada-54003527 https://www.bbc.com/news/world-us-canada-54003527
- matthewdgreen 5y ago
  “Legitimate” in this case refers to any miner who is mining honestly and is simply motivated by profits from the block reward and fees. If we ignore potential price increases and inefficiencies, an ideal mining market should see block production costs increase until the profit margin for such miners is close to zero. But miners with “ulterior motives” can extract more benefit from mining, and so can mine profitably even when production costs are very close to rewards. This means in theory such parties are likely to dominate the mining network. “Ulterior motives” includes a lot of things. It definitely includes money laundering (see Iran and China) but it also includes people who mine so they can conduct 51% and MEV attacks on the network. On the positive side it may include pseudo-altruistic types such as major currency holders, who are willing to mine at a loss in order to support the currency’s value. The thing all of these parties have in common is that none of them are incentivized to mine honestly solely because of the intrinsic profits involved in mining: your hope is that their ulterior motive is compatible with honest behavior. When that isn’t born out, your network runs into trouble. * Obviously in the real world there are tons of capital expenses and prices fluctuate wildly, so this model is loaded with inefficiency that can allow some folks to make money on mining as a business in and of itself. But PoS systems will have fewer such inefficiencies.

Synaesthesia 5y ago

What's wrong with Iran exporting oil? Why can't Iran export oil? The level of economic strangulation the US can achieve over countries is unprecedented. And they're often just arbitrarily punishing countries.

nix23 5y ago
They are part of the "Axis of Evil" TM by George W. Bush
- andy_ppp 5y ago
  To be fair they have kidnapped quite a few British/Iranian citizens including Nazanin Zaghari-Ratcliffe, they are effectively a religious dictatorship and a majority of their own people hate their government who I think have banned dancing in public and have arrested people for making TikTok videos, amongst more serious crimes. I’m not exactly sure the Iranian government are particularly nice people.
  - nix23 5y ago
    >dictatorship and a majority Brought (unwillingly) into power by the US once more: https://en.wikipedia.org/wiki/1953_Iranian_coup_d%27%C3%A9tat#United_States'_role https://en.wikipedia.org/wiki/1953_Iranian_coup_d%27%C3%A9ta... >I’m not exactly sure the Iranian government are particularly nice people. One could say that about the CIA and the US-Government too.
  - GordonS 5y ago
    Keep in mind that there is a huge Western media and government bias against Iran, in the US in particular. I'm not saying the Iranian government doesn't do bad things - it absolutely does, though you could (easily) argue that the US has done far worse. Hell, you can also (again, easily) argue that the US and UK are largely responsible for many of the past wrongs of Iranian governments. As a singular anecdote from 21 years back, I spent a couple of weeks in Iran way back in 2000 (my father was working there as a geologist for an oil company and I joined him during the summer holidays) - things seemed very different than I'd been led to believe. I felt completely safe wandering Tehran alone, and everyone I came across seemed extremely friendly and curious. They seemed to know how their country was portrayed outside of Iran, and wanted to show me otherwise. People talked freely about politics too, expressing likes and dislikes just like any western nation. And the food, my word the food...

ceilingcorner 5y ago

When people say "Bitcoin uses so much energy, it must be shut down!" I like to remind them of a simple fact: the amount of energy and military resources used to ensure the petrodollar's global dominance. It's not even a comparison.

deleted 5y ago
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lasagnaphil 5y ago
I agree with your criticism on the current petrodollar system, but I still don't understand how Bitcoin could replace it. I've yet to see a crypto enthusiast who seems to really think about the implications about world trade purely done in Bitcoin. And the "there was the gold standard back then, it's going to be similar" argument doesn't work, it has historically ended in total disaster and countries which abandoned the system sooner has recovered from the Great Depression more quickly. Right now a Bancor system that's designed to balance imports and exports between countries seems like the more convincing route to achieve peace while continuing global trade. Any ideas?
- logicchains 5y ago
  >And the "there was the gold standard back then, it's going to be similar" argument doesn't work, it has historically ended in total disaster and countries which abandoned the system sooner has recovered from the Great Depression more quickly. Historically prior to the 1900s pretty much everywhere was on a gold or silver standard of some sort.
imtringued 5y ago
That military protects more than the dollar. It also protects all the real resources that give the USD value. From a practical perspective Bitcoin is effectively a virtual, self declared nation state but the only thing that exists within that nation is Bitcoin itself. Thus military expenses in the form of Bitcoin mining only cover a small subset of protection offered by conventional military. Because of this, most Bitcoin proponents are extremely narrow minded, they think the currency equates the entire nation, therefore the USD is equivalent to the entire US and only protecting the USD is equivalent to protecting the entire nation. Every day people run into the same problem with rent control. They believe there are no real resource constraints represented by the price, therefore they believe changing the price alone is enough to solve the problem. Yet they never realize that prices are just information used to allocate scarce real resources. If information is manipulated and no longer reflects reality then it has become a lie and therefore serves nobody except the one who told the lie. Okay now that we have established that currencies are information that reflect the allocation of real resources, then what real resources does Bitcoin allocate? It allocates a share of real resources around the world based on the people who bought and sold it. The irony is that these real resources are being protected by their respective governments, thus the existence of the US military (and all other militaries) is an essential part of Bitcoin's current valuation.

tehwebguy 5y ago

Alternate headline: How Iran manages to maintain some semblance of an economy despite immoral sanctions. Not a crypto person at all but I do remember when the last US president ripped up the Iran deal which afforded the International Atomic Energy Agency the right to inspect their operations and replaced it with... nothing. I think this is proof enough that all of the talk about Iran being a threat (to the US? to the world?) is vastly over hyped. Now we’ve got warhawks, oil companies & the finance industry all working together with Iran as the bogeyman driving all their policies. Watch for Yellen or congress to drop some “bitcoin supports Iran” talking points any minute now.

rjzzleep 5y ago
I think what's actually interesting about it is that Iran actually forbids crypto for local currency transactions, because they don't want people to bypass the local currency. So it's one rule for the government and another for the people. But yes, I agree with most of what you said, also what Jellen said about global corp tax is kind of messed up. They don't want to go after their own big corps, but rather control the rest of the world. As long as the fiscal years start at different times, they can still shuffle money around as they please, but nobody actually dares touching the US corps in the US.
- almost_usual 5y ago
  Bitcoin will never be true decentralization because the real world runs on centralized violence and power grabs.
  - rjzzleep 5y ago
    It can't be decentralized to begin with, because whoever has more money can run more mining and whoever mines more has more power in the network. It's still more about rich hording power. On the flipside it may just be a little bit more distributed and accessible than the current prevalent system.
    - 5y ago

gnfargbl 5y ago

Prior to the re-imposition of US sanctions, Iran was producing around 1400 million barrels of oil per year and exporting around 800 [1]. The article says that Iranian Bitcoin mining is currently consuming the equivalent of around 10 million barrels per year. At a consumption rate of ~1% of the potential exportable amount, this doesn't seem like a particularly significant evasion of sanctions. [1] https://www.bbc.com/news/world-middle-east-48119109 https://www.bbc.com/news/world-middle-east-48119109

asddubs 5y ago
political implications aside, it still seems so crazy that here we're just burning 10 million barrels a year on doing nothing useful at all
- almost_usual 5y ago
  Something something Bitcoin solves all world problems, brings world peace etc.
- logicchains 5y ago
  >political implications aside, it still seems so crazy that here we're just burning 10 million barrels a year on doing nothing useful at all The Iranian people impoverished by sanctions would beg to differ (no pun intended).
  - asddubs 5y ago
    hence "political implications aside". this could also be solved by the US lifting their unjust sanctions
    - lifty 5y ago
      If only we could all get along and sing Kumbaya together, we could solve all the world problems. In this context of human conflict and geopolitical power struggles, does bitcoin make any sense to you?

josu 5y ago

Before reading the article, keep in mind that Elliptic makes money by scaring governments: either selling their software to them directly, or through regulation that is passed forcing companies to hire them.

nathias 5y ago

Gosh golly, it's as if it was made to be a tool against the petrodollar ...

almost_usual 5y ago
That sheds 30% of its value when Elon Musk tweets.
- deleted 5y ago
  [deleted]

newaccount2021 5y ago

news is never accidental. the subtext here is obvious: dear normal people, Uncle Sam will not tolerate a competitor to the USD. get out before we criminalize crypto.

deleted 5y ago

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lvl100 5y ago

How Drug Cartels Use Bitcoin Mining to…

variable11 5y ago

The elites are out in force against Bitcoin, using all the same tired cliches they use for everything: "racism, Iran, Russia, climate change."

uberdru 5y ago

This must be a riff on the article I read a couple of months ago that described Iceland's aluminum industry as a means of exporting its geothermal energy. It's the only plausible argument I have seen for Bitcoin's intrinsic value.

lanevorockz 5y ago

I think the environment is way more important in terms of problems with BitCoin. Evading Sanctions are way easier than that. Give a couple of stacks to Hunter Biden and you are good to go.

xbar 5y ago

Comments this morning seem very aggressive-defensive. How about a different takeway: cryptocurrency defeats current international sanction tools. Whatever your feelings about US/Iran or your feelings about Bitcoin/Climate Change, sanctions have been an effective peace-time tool for the UN to bring countries to the negotiating table. Perfectly effective? No. Security Council politically motivated? Yes. Better than war for the citizens of all countries? Yes. Will Bitcoin lead to more war as a result of weakening the power of sanctions? I wouldn't hazard a guess. But I didn't see this possibility coming.

Udik 5y ago
> cryptocurrency defeats current international sanction tools Yes, exactly. They (in part) defeat an act of unilateral violence, one that is very cheap for the perpetrator, from one country against another. Which seems a very good thing.
StanislavPetrov 5y ago
>cryptocurrency defeats current international sanction tools. If one values international law, or the, "international order" (as Secretary of State Blinken put it, without irony), then a bright line needs be drawn between, "international sanction tools" that are used by the UN and the unilateral sanctions issued by the US. >Will Bitcoin lead to more war as a result of weakening the power of sanctions? Bellicose nations have always issued demands to other sovereign nations backed by the threat of illegal wars of aggression. Will the ability of targeted nations to avoid being starved to death via the use of bitcoin lead to more war? Possibly, but is the problem there really bitcoin, or rogue nations who consider themselves above international law?

kwdc 5y ago

No mention about what happens when China lets Iran purchase oil using their Chia crypto. Interesting omission.

m3kw9 5y ago

10second read+summary: Iran burns oil to mine Bitcoin

timbit42 5y ago
How does that help them export their oil?
- Udik 5y ago
  It doesn't but it allows them to export its value, which is the only thing everyone cares about.

intricatedetail 5y ago

Can these coins be detected and blacklisted? Pretty pointless to do something like this on BTC.

slumdev 5y ago

> Thousands of unlicensed mining farms have subsequently been identified and shut down - including in mosques, which receive free electricity. So...if I open a mosque and mine Ethereum instead of Bitcoin, can I still get some of that free electricity?

74d-fe6-2c6 5y ago

I bet this is why Bitcoin is taking a big hit at the moment. Yes, there are many good reasons for that to happen and maybe it's for the better. But I would put my mouth where the money is that this is the actual reason. It's probably an attack organized by US/Israel against an income source of Iran.

tudorw 5y ago

It's an advert no? "blockchain analytics solutions such as those provided by Elliptic"

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3maj 5y ago

I have been waiting for the media to start to spin bitcoin as something only terrorists and criminals use. Wait for them to start pushing the FED coins as "safe alternatives". It's been a good ride.

CryptoPunk 5y ago

Elliptic is a cryptocurrency surveillance firm. It stands to see significantly more client contracts if cryptocurrency exchanges are forced by governments to engage in extreme transaction filtering. That the harm this would do to cryptocurrency fungibility/utility would vastly outweigh any benefit from being able to more effectively starve Iran and Venezuela of funds - if this can even be called beneficial - is incidental to the impact on Elliptic's bottom line.