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In parts of the world where the cost of electricity is low but reliable internet connectivity is available, cryptocurrency mining is widespread among those who
by temp-dude-87844 5y ago
In parts of the world where the cost of electricity is low but reliable internet connectivity is available, cryptocurrency mining is widespread among those who can procure the hardware. For these operators, it's a low-risk way to generate profit and obtain foreign currency, and typically presents a far better opportunity than most other legal or illegal employment that can be had in the area.
This profiteering situation tends to crop up in places where the cost of electricity is "artificially" low, e.g. the government subsidizes it because of national security, humanitarian reasons, or to promote economic development, or places that cannot meaningfully participate in international bulk electricity export (e.g. distance, politics). These places formed functional market islands until recently, so their pricing was not relevant in the global context.
With cryptocurrency mining, the miners are engaging in a global arbitrage on energy prices. While the environmental costs are already externalized by the producer of the electricity, the electricity producers made those decisions before they foresaw that individual citizen operators could consume large amounts of electricity, and scale their consumption higher with fewer constraints than industrial consumers can.
Solutions are possible, but challenging to implement and enforce. If you switch to progressive pricing, you need better meters, and determined miners will steal or convince people to resell. If you want to regulate mining, you will need enforcement and tackle corruption. If you want to "let the market fix it", poor people won't be able to afford electricity.
Within Kosovo, the Serbian community controls the hydroelectric plant, and the Kosovan community controls the two lignite plants. This adds an extra complication for policymakers.
- michaelt 5y ago> If you want to "let the market fix it", poor people won't be able to afford electricity. What do you think of replacing the subsidy with giving citizens/industries electricity vouchers of equivalent value?
- liuliu 5y agoBureaucracy will be in your way. Who is going to distribute these vouchers? Based on what criteria? What "equivalent" value is going to be?
- abecedarius 5y agoOr, y'know, cash.
- retrac 5y ago> so their pricing was not relevant in the global context There are other sinks for cheap electricity in an industrial economy. Aluminum is a common one, as the main extraction is an electrochemical process. Canada is the 4th largest producer and Iceland (!) 11th.
- Lol_80005 5y agoCompetitive and relevant Aluminum smelting requires massive economies of scale, an initial capital outlay, and a supply chain. A competitive smelter might require a billion dollars and a few years to build. And you have to negotiate a regular stream of bauxite ore, materials, etc. It's not an easy or quick arbitrage.
- watt 5y agoThis is all true if the country thinks allowing folks to take advantage of this "arbitrage" would be useful (for some definition of "useful"). And on other hand I can very well see how government(s) can take the other approach and just do some heavy-handed policing.
- pjc50 5y agoIt's basically distributed neoliberalism: you don't have to wait for a United Fruit Company to turn up and wreck your country's economy for profit, anyone can do it now!
- andrewjl 5y agoWhat about expanding capacity?
- JAlexoid 5y agoCapital costs and multiple other reasons. It's practically easier to mandate discounts or payouts to vulnerable households, than it is to artificially reduce price of electricity. If you're that avid about crypto mining - you may want to just build your own hydro electric power plant.
- SilasX 5y agoFYI there’s also a great thread going on in the other topic about energy arbitrage from crypto, making many of the same points: https://news.ycombinator.com/item?id=29808640 https://news.ycombinator.com/item?id=29808640
- bko 5y agoA price is a signal and serves as incentive to produce the good. Setting an arbitrary low price for anything is a bad idea. > If you want to "let the market fix it", poor people won't be able to afford electricity. If you want to give poor people electricity, just give them money which they can use for electricity or whatever else they may need. The solution isn't to pretend that electricity is cheaper than it is. Not only does it create issues like miners exploiting the system, but it also encourages wasteful uses of electricity, removes a valuable market signal and removes autonomy of those poor people you're trying to help. Maybe they would trade off some electricity for better housing. Instead you're making the decision for them.
- mijamo 5y agoWhat would happen in reality is poor people would steal electricity and the whole system would collapse, which is what has happened in many places many time before and is still happening in many places. It's not like it's hard to draw a few cables. Also "just give money to people" in systems with very poor and sometimes corrupted administrations is a very sure way of ensuring poor people get nearly nothing and it all gets siphoned in the pockets of not very nice people.
- watwut 5y agoThis is downvoted, but afaik both actually happened.
- drdeca 5y agoWould "give poor people electricity credits (denominated in the currency) which can be redeemed by the electrical companies (and not anyone else) for actual money" be viable and help avoid the corrupt admins siphoning the money?
- radu_floricica 5y agoIt's the same as subsidizing electricity. Giving them cash allows for completely new and specific solutions, in a huge variety of forms. Better insulation. Switching to cheap heat pumps. Pooling cash together for a scaled-up approach - even if it's just family moving together. Not heating during the day. Accepting a lower temperature and using the funds for something else. Getting a credit for a more expensive fix. Subsidizing electricity, directly or indirectly, is an incentive to do exactly nothing. Power is cheap, so you use it to heat the house - period. Any move to be more energy efficient doesn't make sense.