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The Ecological Impact of Profit Driven Cryptocurrencies

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Abstract

This investigative essay looks into the Chinese manufacturing industry behind bitcoin. It tries to understand what manufacturers of mining rigs and operators of mining farms are driven by and analyses the effects of their activities on the global ecosystem. It concludes with guidelines for the creation of a social currency which is operated for the benefit of people and planet.
Why$Bitcoin$Is$Both$A$Risk$for$Doom$And$An$Opportunity$For$Transformation:$$
Reporting$on$The$Chinese$Manufacturing$Industry$Behind$Cryptocurrencies!!!!!!!!!!!!!!
2018$(c)$telospi.com$$ $
1$
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Shenzhen,$18.$January,$2018.$As$I$enter$the$arrival$hall$in$Baoan$Airport$my$eyes$search$for$Vasily$in$
vain.$He$is$not$here.$I$give$him$a$call$and$he$picks$up$the$phone.$“I$am$on$my$way.$You$told$me$that$
you$would$arrive$a$quarter$to$eight.”$I$sit$down$in$a$Costa$Coffee$next$to$the$arrival$exit$and$wait$for$
him.$Vasily$shows$up$ten$minutes$later$and$sits$down$opposite$of$me.$I$notice$that$he$is$taller$than$
in$my$memory;$probably$1.90,$slim,$dressed$in$black$jeans$and$a$black$denim$shirt,$a$grey$scarf$tied$
around$his$neck.$If$he$wouldn’t$have$bracelets,$he$could$appear$as$a$Russian$spy$in$a$James$Bond$
movie.$$
$
Vasily$is$actually$from$the$Ukraine$and$I$met$him$only$two$weeks$earlier$on$a$Shanghai$event,$where$
I$spoke$about$the$future$of$work$and$the$impact$of$robotics$and$AI.$He$approached$me$after$the$
event$and$explained$that$he$owns$a$trading$company,$which$buys$mining$rigs$in$Shenzhen$and$sells$
them$to$Eastern$Europe,$Russia$and$the$US.$As$the$conversation$unfolds,$he$provides$incredible$
numbers$about$the$hardware$industry$behind$the$Bitcoin$hype,$and$I$am$hooked.$Mining$rigs$|$挖矿
.$What$in$God’s$name$is$he$talking$about?$Aren’t$rigs$infrastructure$to$drill$for$oil?$$
$
I$had$a$few$years$ago,$when$I$first$heard$about$Bitcoin$and$cryptocurrencies,$opened$a$mental$
drawer$and$put$the$entire$subject$'(!'*.':$pyramid$scheme.$Those$who$come$first$earn$massive$
profits,$those$who$come$last$bear$the$risk.$Recently,$the$blockchain$technology$behind$Bitcoin$has$
attracted$my$interest$after$reading$Heinz$von$Förster$and$Bernhard$Pörksen’s$conversation$on$
Why$Bitcoin$Is$Both$A$Risk$for$Doom$And$An$Opportunity$For$Transformation:$$
Reporting$on$The$Chinese$Manufacturing$Industry$Behind$Cryptocurrencies!!!!!!!!!!!!!!
2018$(c)$telospi.com$$ $
2$
Understanding$Systems.$Förster,$who$had$the$nickname$Socrates$of$Cybernetics,$explains$therein$
the$concept$of$circularity$and$I$immediately$understood$that$blockchain$indeed$is$the$technology$to$
put$in$reality$what$the$participants$of$the$Macy$Conferences$have$probably$envisioned$for$humanity$
back$in$the$1950s:$meritocracy.$
$
Vasily$is$from$Kiev,$studied$Chinese$and$worked$as$a$translator$for$heavy$and$military$industry$
companies$which$sell$their$products$to$China.$He$did,$as$a$matter$of$fact,$also$support$the$sales$of$
huge$excavators,$the$kind$of$which$is$used$in$large$surface$mines.$He$tells$me$with$an$air$of$genuine$
astonishment,$that$his$old$clients$always$wanted$to$know$every$detail$of$the$machine$they$were$
about$to$purchase;$but$not$his$new$clients.$They$ask$no$questions$and$pay$up$to$USD$6000$for$a$
single$rig.$Only$seven$months$ago$he$left$the$physical$mining$industry$for$the$digital$one.$My$facial$
expression$must$have$given$away$my$disbelief,$because$he$pulls$out$his$mobile$and$shows$me$
pictures$of$machines$which$look$a$bit$like$chunky$early$desktop$computers$without$monitor.$
$
$
$
My$new$technical$advisor$explains$that$mining$rigs$are$supercomputers$which$contain$between$170$
and$200$chips,$each$one$of$them$capable$to$operate$a$high-end$laptop.$Once$they$are$launched,$they$
perform$the$complex$calculations$which$are$required$to$mine$for$Bitcoins.$A$crash$course$for$those$
who$know$even$less$than$me$about$Bitcoin:$the$digital$currency$was$launched$in$2009$and$is$
created$as$a$reward$for$a$so-called$proof$of$work,$i.e.$solving$hyper$complex$calculations$with$a$
computer.$The$currency$operates$with$blockchain$technology,$which$is$characterized$by$being$
decentralized$and$encrypted.$$
$
Now,$I$originally$liked$that$idea$and$the$timing$couldn’t$have$been$better.$With$the$GFC$in$full$swing,$
the$mysterious$Bitcoin$founders$who$are$known$under$the$pseudonym$Satoshi$Nakamoto$definitely$
felt$the$pulse$of$an$era$which$is$characterized$by$faltering$economies,$decadent$capitalism,$corrupt$
governments$and$banks$which$are$too$big$to$fail.$They$established$with$Bitcoin$in$a$revolutionary$
hacker$act$a$currency$which$is$not$controlled$by$a$central$bank$and$can’t$be$manipulated$by$
Lehman$Brothers$&$Co.$So$far$so$good.$$
$
Why$Bitcoin$Is$Both$A$Risk$for$Doom$And$An$Opportunity$For$Transformation:$$
Reporting$on$The$Chinese$Manufacturing$Industry$Behind$Cryptocurrencies!!!!!!!!!!!!!!
2018$(c)$telospi.com$$ $
3$
Humanity’s!Challenges!Mirrored!In!Bitcoin!
1. Scarcity$and$exclusion$vs$abundance$and$inclusion$
2. Environmental$degradation$vs$ecological$conservation$
3. Greed$vs$kindness!
The$problem$with$Bitcoin$and$as$far$as$I$can$tell$with$all$cryptocurrencies$is$that$it$operates$apart$
from$decentralization$and$fraud$security$along$the$same$lines$as$all$fiat$currencies$do:$Bitcoin$
establishes$a$financial$system$of$scarcity$which$gives$preferred$access$to$tech-savvy$instead$of$
finance-savvy$people$–$or$even$worse:$a$combination$of$the$two$-$and$leaves$most$of$humanity$to$its$
own$terms.$It$is$a$financial$system$which$is$driven$by$greed$instead$of$charity$and$it$rewards$futile$
mining$with$profit$instead$of$motivating$man$to$do$good$at$his$neighbor$or$the$environment.$
Researchers$at$Cornell$have$recently$confirmed$this$assumption$by$showing$that$Bitcoin$and$
Ethereum$mining$is$very$centralized,$with$the$top$four$miners$in$Bitcoin$and$the$top$three$miners$in$
Ethereum$controlling$more$than$50%$of$the$hash$rate$and$the$entire$blockchain$for$both$systems$is$
determined$by$fewer$than$20$mining$entities.$
Speaking$of$the$environment,$there$is$a$third$downside$to$Bitcoin$which$is$widely$discussed$in$
“green”$circles$lately,$at$least$since$the$World$Economic$Forum$posted$a$short$clip$explaining$that$
Bitcoin$mining$consumed$at$the$end$of$2017$every$day$as$much$electricity$as$Ireland$and$Nigeria$
together$and$will$by$2020$consume$more$electricity$than$the$entire$world.$Well,$that’s$some$
exponential$growth$supercharged$by$nihilist$greed.$More$for$me$at$the$expense$of$the$planet$and$
anyway,$fuck$you$all.$
$
The!Ascent!of!Money!
$
Despite$only$3-5$million$Bitcoin$users,$only$about$120.000$shops$which$accept$Bitcoin$as$payment$
and$0.2%$electricity$consumption$of$the$total$global$volume,$we$need$to$recognize$that$Bitcoin$is$an$
important$invention$in$the$history$of$finance,$which$will$change$things$forever.$Historian$Neil$
Ferguson$summarized$in$2008$the$milestones$of$financial$innovation$and$made$it$clear$that$
innovation$is$not$limited$to$technology$and$science,$but$extends$deeply$into$the$realm$of$money.$It$
is$the$confluence$of$science,$technology$and$finance$that$creates$the$most$powerful$social$change$
maker;$for$better$or$worse.$
$
Humanity$uses$money$since$about$four$millennia$and$as$much$as$one$wants$to$stigmatize$this$
invention$as$a$devil’s$deed,$money$is$very$much$like$technology$nothing$more$than$a$mean$to$an$
end.$The$problem$for$many$people$is$the$sheer$fact$that$they$confuse$the$mean$with$the$end$and$get$
stuck$in$a$mindset$which$declares$money$either$Satan$or$God.$Ferguson$writes$that$it$is$as$a$matter$
of$fact$only$a$3%(+93!/<!%B*$'&,%8!#$+*$!$'-!.$%!'()'&.',%!/<!%0+3+&'.+&,!+&%<<+*+%&*+%-!/<!6'2.%2D!'!
9&+.!/<!'**/9&.8!#$+*$!<'*+0+.'.%-!)'09'.+/&!'&(!*'0*90'.+/&D!'&(!'!-./2%!/<!)'09%8!#$+*$!'00/#-!
%*/&/3+*!.2'&-'*.+/&-!./!6%!*/&(9*.%(!/)%2!0/&,!7%2+/(-!'-!#%00!'-!,%/,2'7$+*'0!(+-.'&*%-E$$
$
Ferguson$recounts$that$with$money$came$borrowing$and$lending,$which$was$in$the$Italian$city$
states$as$early$as$the$11th$century$institutionalized$in$banks.$Governments$started$to$issue$bonds$in$
Why$Bitcoin$Is$Both$A$Risk$for$Doom$And$An$Opportunity$For$Transformation:$$
Reporting$on$The$Chinese$Manufacturing$Industry$Behind$Cryptocurrencies!!!!!!!!!!!!!!
2018$(c)$telospi.com$$ $
4$
the$13th$century$to$finance$wars$and$other$major$investments.$Corporations$followed$that$model$by$
issuing$stock$from$the$15th$century$onwards.$The$19th$century$introduced$the$private$insurance$as$a$
vehicle$to$spread$risk.$Governments$reinvented$this$concept$in$the$20th$century$to$increase$the$
health$of$their$taxpayers$through$social$security.$The$20th$century$saw$an$exponential$growth$in$
financial$innovation$and$introduced$mortgage$backed$securities,$which$exploit$the$human$need$for$
safety$and$render$the$concept$of$property$ownership$ad$absurdum.$The$collateralized$mortgage$
obligation$was$the$cradle$for$other$such$neo-mercantilist$innovations$like$derivatives,$futures$and$
options,$all$of$which$contributing$to$the$subprime$housing$crises$and$eventually$to$the$2009$GFC.$$$$
$
Historian$Yuval$Harari$did$point$out$in$Sapiens$–$A$Brief$History$of$Mankind$that$money$had$an$
enormously$unifying$effect$on$humanity,$which$by$far$outpaced$the$two$other$contenders$for$
bringing$unity$to$our$species:$religion$and$empires.$Money$must$also$be$considered$as$being$most$
conducive$to$the$development$of$written$language$since$the$earliest$remains$of$human$writing$are$
Sumerian$accounting$books$dating$back$three$millennia$BC.$We$clearly$must$acknowledge$that$
there$wouldn’t$have$been$any$progress$in$our$civilizations$without$financial$innovations,$but$we$
also$must$understand$that$the$story$of$money$comes$with$a$narrative$of$profit$extraction$and$
system$blindness,$that$is,$a$story$of$human$virtue$and$vice.$$
$
!
US!Capitalism!on!Chinese!Steroids!
$
Vasily$and$me$ride$an$illegal$cab$from$the$airport$20km$north,$where$the$mining$rig$warehouse$is$
located.$We$pass$a$huge$building$with$neon$lit$letters$saying$深圳西硅谷$|$Shenzhen$West$Silicon$
Valley.$There$is$no$doubt$about$this$city’s$aspirations.$I$recall$a$recent$chat$with$an$Apple$engineer$
who$flies$once$a$quarter$to$Shenzhen$to$check$the$production$quality$of$California$designed$
The$Ascent$of$Money
1/21/18 2017%©%telospi.com 7
Time
Innovation
Application
2
nd mil$BC
Money
standardized*unit*for*the*exchange*of*goods*&*services
11
th century
Banks
Borrowing(of(money
13
th century
Bonds
Financing'governments
17
th century
Stock
Financing
corporations
19
th century
Insurance
Spreading*risk
and$and$exploiting*economies*of*scale
20
th century
Social
insurance
Healthier)tax
payers
20
th century
Mortgage
backed'security'
Exploitation*of*human*need*for*safety*
20
th century
E
-payment
Elimination)
of#human#interaction
21
st century
Cryptocurrencies
Elimination)
of#intermediary banks
A"story"of"accelerated"profit"extraction"and"system"blindness
Why$Bitcoin$Is$Both$A$Risk$for$Doom$And$An$Opportunity$For$Transformation:$$
Reporting$on$The$Chinese$Manufacturing$Industry$Behind$Cryptocurrencies!!!!!!!!!!!!!!
2018$(c)$telospi.com$$ $
5$
products.$Many$engineers$lament$that$manufacturing$has$moved$to$China$and$are$full$of$envy$about$
the$high$concentration$of$hardware$production$facilities$in$Shenzhen.$$
$
The$city,$which$was$basically$founded$in$1992,$when$Deng$Xiaoping$undertook$his$famous$journey$
south$to$open$in$Shenzhen$the$first$special$economic$zone$(SEZ)$is$as$of$today$only$second$to$Beijing$
in$the$number$of$resident$billionaires.$In$particular$real$estate$tycoons$–$which$according$to$Hurun$
make$up$for$about$2/3$of$China’s$wealth$and$high-tech$entrepreneurs$have$chosen$safe$distance$
from$the$capital$and$vicinity$with$the$established$trade$and$finance$center$Hong$Kong.$Global$giants$
like$Vanke,$BYD,$Tencent,$Huawei,$ZTE$and$rising$tech$stars$like$Megmeet$or$Bitmain$call$the$city$
their$headquarter.$$
$
Bloomberg$reports$that$many$Chinese$Silicon$Valley$employees$flock$recently$back$to$this$place$
despite$not$even$in$the$furthest$resembling$any$part$of$California.$Shenzhen$is$about$to$merge$with$
Hong$Kong,$Guangzhou$and$other$cities$in$the$Pearl$River$Delta$and$the$region$is$expected$to$turn$
by$2030$into$the$world’s$largest$metropolitan$area$with$about$120$million$inhabitants.$Population$
density,$thick$smog$and$industrial$pollution$can’t$be$the$pull$for$these$sea$turtles$to$return$to$their$
hatching$beaches.$$$
$
F$%2%!'2%!<%#!.$+&,-!0%--!70%'-+&,!./!.$%!G/2(8!'&(!0%--!72/(9*.+)%8!.$'&!'&!%&,+&%%2+&,!(%7'2.3%&.!
.$'.!2'7+(01!.92&-!/9.!6%'9.+<90!609%72+&.-!</2!.$%!#2/&,!72/(9*.E!?H%.%2!IE!J29*K%28!L'&',%3%&.!
H$+0/-/7$%2C!
$
Vasily$tells$me$that$he$was$in$Bitmain’s$Shenzhen$offices$only$this$week$to$negotiate$about$a$larger$
mining$rig$order.$Stock$is$currently$difficult$to$come$by$at$Bitmain$and$only$direct$purchase$from$
the$manufacturer$guarantees$good$margins.$He$asked$for$1000$pcs$of$ant$miner$S9$13.5T,$Bitmain’s$
newest$mining$rig,$which$will$soon$be$substituted$by$the$S9$14T$model.$Bitmain$told$him$that$the$
maximum$order$he$could$place$after$Chinese$New$Year$were$400$pcs$and$that$the$price$would$be$
USD$2400$each.$He$would$be$able$to$pick$up$his$batch$mid-April$implying$a$lead$time$of$roughly$two$
months$and$prepayment.$$
$
Since$I$don’t$understand$the$craze$about$Bitmain,$Vasily$tells$me$a$bit$more$about$the$company$
background.$Founded$only$in$2013$by$former$financial$analyst$Wu$Jianhan$and$tech$media$
entrepreneur$Zhan$Micree,$the$company$has$since$then$embarked$on$a$steroid$charged$growth$and$
innovation$trajectory.$Headquartered$in$Beijing$as$比特币大陆科技有限公司,$literally$translated$
Bitcoin$Mainland$Ltd.,$its$name$does$indicate$their$founders’$mission:$to$develop$a$Chinese$
substitute$for$Bitcoin$or$displace$it$altogether.$
$
Despite$this$techno-nationalistic$ambition,$Bitmain$has$lately$run$into$problems$with$Beijing,$
because$its$activities$have$increasingly$threatened$the$stability$of$the$Chinese$Yuan.$It$is$mainly$due$
to$Bitmain’s$role$as$leading$manufacturer$of$Bitcoin$mining$rigs,$its$vast$investment$in$mining$farms$
and$Chinese$investor’s$rush$on$cryptocurrencies$as$alternatives$to$the$rigid$domestic$financial$
system,$that$initial$coin$offerings$(ICO)$have$been$declared$illegal$in$mainland$China.$Since$mining$
farms$have$also$come$under$more$scrutiny,$Bitmain$considers$to$shift$parts$of$its$business$model$
Why$Bitcoin$Is$Both$A$Risk$for$Doom$And$An$Opportunity$For$Transformation:$$
Reporting$on$The$Chinese$Manufacturing$Industry$Behind$Cryptocurrencies!!!!!!!!!!!!!!
2018$(c)$telospi.com$$ $
6$
and$looks$for$B2G$partnerships,$i.e.$governments$which$are$willing$to$enter$long$term$agreements$
and$can$provide$cheap$electricity.$$
$
Vasily$believes$in$Bitmain’s$short$term$success$and$has$also$started$to$think$about$establishing$
mining$farms$in$other$countries.$He$tells$me$that$he$and$his$US$business$partner$have$founded$
Cryptocurrency$Mining$Inc.$(CMI)$in$Virginia$State$and$have$sold$up$till$now$roughly$700$rigs$to$
clients$in$Ukraine,$Russia$and$US$of$America.$They$have$made$friends$with$a$sales$manager$at$
Bitcoin$who$moves$them$on$the$waiting$list$forward$in$exchange$for$a$commission$to$cut$the$
intermediary$margin.$Purchasing$from$Bitmain$directly$is$difficult$and$most$batches$are$sold$out$
long$before$they$are$manufactured.$While$latest$models$cost$at$Bitmain$around$USD$2000,$they$are$
resold$by$1st$tier$traders$for$around$USD$4000$and$get$to$the$end$customer$for$more$than$USD$5000.$
“Margins$are$just$phenomenal,”$Vasily$says.$$$$
$
Our$cab$stops$opposite$of$Tianhong$Mall$at$Kaijia$Hotel,$both$buildings$lit$with$neon$and$towering$a$
dozen$floors$over$a$large$intersection.$A$short$Chinese,$dressed$completely$in$black,$military$hair$
cut,$opens$the$car$door$and$throws$a$few$words$Russian$at$me.$We$walk$into$the$hotel$lobby$and$
while$the$staff$copies$our$passports,$I$realize$that$we$are$in$the$midst$of$negotiations.$Vasily$asks$for$
the$current$price.$Lao$Wang$types$27000$into$his$iphone.$He$divides$by$6.4,$shows$Vasily$4218$and$
adds$“美金$|$USD.”$Vasily$in$turn$calls$a$friend$to$confirm$the$price$from$another$retailer$and$comes$
back$to$the$conversation$with$a$new$number:$25500.$I$am$losing$my$patience$with$the$hotel$staff,$so$
does$Vasily’s$friend,$“Impossible”$he$says,$typing$26500$into$his$phone.$“This$is$my$last$price.$How$
many$do$you$want$to$buy$anyway?”$$
$
We$queue$up$for$the$elevator$with$four$young$women$and$ride$up$to$the$third$floor.$The$female$
hotel$attendant$who$takes$us$to$our$rooms$smiles$at$us$when$the$women$get$out$of$the$elevator$and$
smiles$awkwardly,$“We$have$a$KTV$on$2nd$and$3rd$floor.$Your$rooms$might$be$a$bit$noisy.”$Her$
warning$turns$out$to$be$true$and$I$am$wake$until$2am$despite$ear$plugs$listening$to$the$disharmonic$
vocals$of$drunk$men.$We$leave$our$rooms$though$immediately$after$dropping$off$our$luggage$and$
head$out$to$see$the$mining$rig$distributors.$$
$
We$leave$the$hotel$through$its$back$entrance,$which$also$serves$as$the$night$club’s$main$entrance$
and$walk$only$100$meters$to$the$next$block$of$buildings.$Innovative$company$names$expect$us$
there,$generally$inducing$a$sense$of$industry$and$confidence:$Honey$Bee$Technology$|蜜蜂科技$,$
Guangxi$China$Technology$Ltd.$|桂华科技有限公司,$Dragon$God$Excavators$|神龙矿机,$Yutong$
Mining$Corp.$|$禹彤矿业,$Profound$Trust$Mining$Corp.$|信矿业.$The$creators$of$Yutong$Mining$
Corp.$must$have$brooded$substantially$about$how$to$call$their$enterprise$and$I$am$intrigued$how$
Chinese$entrepreneurs$quite$often$manage$to$claim$the$past$of$their$ancient$culture.$Yutong$was$the$
mythical$founder$of$the$Xia$Dynasty$which$reigned$over$the$cradle$of$Chinese$civilization$between$
the$21st$and$16th$century$BC.$He$is$also$nicknamed$as$the$tamer$of$the$floods.$We$will$see$if$the$
current$ruler$of$this$country$will$be$able$to$tame$the$floods$unleashed$by$this$industry.$$
$
A$Dexun$|$德讯物流$packaging$station$is$perched$in$between$the$distributor$offices$and$about$two$
dozen$men$are$busy$moving$palettes$of$mining$rigs$from$one$place$to$another,$preparing$the$
Why$Bitcoin$Is$Both$A$Risk$for$Doom$And$An$Opportunity$For$Transformation:$$
Reporting$on$The$Chinese$Manufacturing$Industry$Behind$Cryptocurrencies!!!!!!!!!!!!!!
2018$(c)$telospi.com$$ $
7$
packages$for$their$final$destinations.$I$take$a$closer$look$at$the$delivery$notes$and$read$29$pieces$to$
Shanxi,$32$pieces$to$Xinjiang.$“Why$do$most$of$these$deliveries$stay$in$China?$I$thought$mining$is$no$
anymore$allowed.”$Vasily$pulls$me$away$and$takes$me$to$Yutong$Mining$Corp.,$where$he$waves$to$a$
young$fellow$inside$the$office.$The$young,$tall$man$with$blonde$hair$introduces$himself$as$Sasha.$
Dressed$in$super$slim$jeans$and$a$wide$Moschino$T-Shirt,$probably$in$his$early$20s,$he$is$not$really$a$
match$for$this$industry,$but$he$turns$out$to$know$or$at$least$talk$a$lot.$
$
Sasha$has$been$living$in$China$for$10$years,$most$of$the$time$in$Shenzhen,$and$now$works$as$a$
Russian-Chinese$translator$for$Yutong.$His$boss$is$a$Shanxi$business$woman$who$operates$both$a$
distributor$network$for$mining$rigs$as$well$as$mining$farms$in$Shanxi$and$Xinjiang.$Sasha$is$clearly$
part$of$this$gold$rush.$He$skips$from$one$leg$to$another$and$tells$us$that$he$hardly$sleeps,$maybe$two$
or$three$hours$a$night.$He$stays$here$every$evening$until$11$pm$and$thinks$that$he$suffers$from$
insomnia.$“I$am$ok$though,”$he$adds,$“its$exciting.”$He$explains$that$Dexun$has$set$up$shop$here$to$
ship$mining$rigs$throughout$the$country$and$beyond,$since$most$manufacturers$are$based$in$
Shenzhen$and$a$large$fraction$of$the$production$volume$goes$through$the$dealers$on$site.$$
$
“This$morning$we$sold$the$S9$13.5$model$for$23500,$but$this$evening$it$was$27000,”$Sasha’s$eyes$
are$shining$and$he$smiles$broadly.$The$hardware$behind$the$entire$mining$craze$is$tightly$linked$to$
the$value$fluctuations$of$the$cryptocurrency.$“Sure,$you$can$also$buy$second$hand$rigs.$We$just$got$a$
batch$of$400$returned$from$a$Xinjiang$business$man.$He$thinks$that$operating$a$farm$is$too$
dangerous$with$the$government$increasing$electricity$prices$and$potentially$shutting$down$
operations.$In$such$a$situation,$you$can$get$rigs$much$cheaper.”$$$
$
I$ask$Sasha$why$most$of$the$Dexun$deliveries$still$go$to$Chinese$recipients$when$it$is$illegal$to$run$
farms.$He$replies$that$“It’s$a$shame$that$the$government$tries$to$destroy$such$a$profitable$industry,”$
and$explains$that$there$is$always$the$possibility$to$strike$a$deal$with$local$governments$and$
continue$farming$operations.$“Although$such$huge$power$consumers$must$be$easy$to$locate?”$I$
want$to$know.$Sasha$shows$that$he$has$assimilated$himself$to$skirting$regulations$and$understands$
the$complex$dynamics$of$multiple$interests$in$Chinese$society.$“You$see,$for$the$government$and$the$
State$Grid$(the$state-owned$electricity$supplier)$it’s$a$great$business$to$have$stable$and$large$
consumers$and$they$would$like$to$continue$cooperation;$many$local$governments$do$also$harvest$
tax$revenue$in$remote$locations.$They$naturally$want$the$farms$to$continue$operation.”$$
$
On$our$way$back$to$the$hotel$a$shiver$runs$down$my$back$as$I$realize$that$I$just$discussed$the$
manufacturing$industry$behind$one$of$the$milestones$in$financial$innovation$with$two$Caucasian$
men$in$Chinese,$not$in$English.$A$clear$sign$of$where$power$converges$in$the$21st$century$at$the$
intersection$with$science$and$technology.$The$nightclub$is$in$full$swing,$barflies$queuing$at$the$
elevator$and$deafening$Karaoke$singing$already$penetrating$the$lobby,$and$I$continue$to$chat$with$
Vasily$about$the$implications$of$Bitcoin$mining$for$the$Chinese$government.$Why$were$ICOs$
declared$illegal$in$2017?$Cryptocurrencies$do$not$only$corrupt$the$USD,$but$all$national$and$
centrally$controlled$currencies.$$
$
Why$Bitcoin$Is$Both$A$Risk$for$Doom$And$An$Opportunity$For$Transformation:$$
Reporting$on$The$Chinese$Manufacturing$Industry$Behind$Cryptocurrencies!!!!!!!!!!!!!!
2018$(c)$telospi.com$$ $
8$
Bitcoin$is$thus$a$threat$for$all$governments$and$its$growth$in$value$increases$not$only$the$USD$but$
also$the$CNY$inflation.$But$if$Beijing$were$really$concerned$about$the$CNY$being$corrupted$by$
Bitcoin$banning$farms$from$its$territory$doesn’t$seem$to$be$the$decisive$blow$required$to$stabilize$
its$own$currency.$It$would$have$to$shut$down$the$manufacturers$of$mining$rigs$and$could$do$so,$
because$90%$of$them$are$located$on$its$territory.$Antminer$|$蚂蚁Divine$Horse$|$Avalong$|$
阿瓦隆,Chipmover$|$科技,Wingbit$|$翼比特.$The$industry$leaders$are$all$Chinese.$So,$why$is$
it$holding$back$a$lethal$strike?$
$
Its$seems$like$Beijing$is$in$a$dilemma.$There$are$high$tech$companies,$which$create$jobs$and$add$
value$to$the$economy,$but$indirectly$sabotage$the$national$currency.$On$top$of$that$companies$like$
Bitmain$are$rising$stars$in$artificial$intelligence$research,$one$if$not$the$most$strategic$industry$
Beijing$wants$to$dominate.$Vasily$believes$that$the$company$has$a$vision$which$goes$far$beyond$
Bitcoin.$The$revenue$made$with$the$sales$of$mining$rigs$is$reinvested$in$the$development$of$Sophon,$
a$new$generation$of$microchip,$which$is$according$to$the$company$founders$supposed$to$power$AI$
towards$singularity.$$
$
Wired$published$about$a$year$ago$a$piece$about$where$Zhan$Micree’s$inspiration$for$Sophon$came$
from:$science$fiction$author$Liu$Cixin$calls$a$proton$sized$microprocessor$Sophon.$It$is$spread$on$
Earth$by$hostile$aliens$in$his$novel$The$Three$Body$Problem.$Bitmain$is$also$active$in$robotics$–$or$
should$I$rather$say$education$-$and$has$recently$presented$Luo$Xiaodou.$This$small$robot$which$
resembles$Eve$from$Pixar’s$Wall-E$is$designed$to$support$children$in$their$learning$progress.$I$
won’t$go$here$into$details,$but$ask$any$developmental$psychologist,$kindergarten$or$primary$school$
teacher$and$they$will$all$tell$you$that$children$learn$best$with$humans,$not$robots.$One$is$left$with$a$
foul$taste$about$all$Bitmain$activities$and$must$wonder:$which$end$justifies$these$means?$$
$
Vasily$also$confides$to$me$his$conspiracy$theory,$but$only$after$he$admits$that$he$thought$that$I$am$
Australian.$Now$that$he$knows$that$I$am$from$this$beautiful$country$which$is$home$to$Steyr$rifles,$
“True$works$of$art”$he$marvels,$and$Alfred$Adler’s$individual$psychotherapy,$he$expounds$his$
theory$about$mining$rigs$being$remotely$controlled$and$Bitmain$trying$to$build$a$global$
supercomputer.$I$give$the$idea$some$thoughts$and$swiftly$have$Matrix-like$visions$in$my$head.$What$
if$the$mining$rigs$could$really$be$controlled$through$the$web$and$what$if$Bitmain$will$launch$
Sophon$to$take$over$their$collective$processing$power?$What$would$that$mean$for$humanity?$$
$
Accelerated!Currency!Life!Cycles!
$
I$don’t$arrive$though$at$dooms$day$science$fiction$scenarios$of$either$the$Chinese$government$
taking$over$the$world$through$Bitmain$nor$aliens$usurping$our$planet.$Quite$on$the$contrary,$I$start$
to$think$again$about$currency$life$cycles$and$financial$innovation$and$what$Thomas$Hobbes$meant$
when$he$used$in$Leviathan$the$much$older$proverb$$/3/!$/3+&+!0979-.$Humankind$doesn’t$need$
hostile$aliens,$because$it$excels$at$destroying$itself.$One$really$has$to$spend$a$few$thoughts$on$the$
monetary$system$to$understand$what$digital$currencies$have$kicked$off$and$what$our$greed$driven$
race$towards$singularity$implies.$$
$
Why$Bitcoin$Is$Both$A$Risk$for$Doom$And$An$Opportunity$For$Transformation:$$
Reporting$on$The$Chinese$Manufacturing$Industry$Behind$Cryptocurrencies!!!!!!!!!!!!!!
2018$(c)$telospi.com$$ $
9$
The$US$Dollar,$which$is$still$the$most$dominant$global$currency,$has$been$in$use$since$its$inception$
in$1792,$but$was$1971$decoupled$from$gold$and$is$since$then$fiat$currency,$i.e.$a$value$we$believe$in$
and$which$has$no$representation$in$the$physical$world.$One$could$argue$now$whether$the$USD$has$
had$a$hitherto$life$span$of$roughly$230$or$45$years,$but$one$would$always$come$to$the$conclusion$
that$not$only$the$USD,$but$all$fiat$currencies$are$subject$to$a$life$cycle$of$birth$and$death.$Why$is$
that?$$
$
This$statement$is$grounded$on$three$simple$observations.$Firstly,$all$currencies$that$humanity$has$
seen$so$far$have$created$abundance$for$a$few$and$scarcity$for$the$majority;$they$are$as$such$an$
exchange$mechanism$which$gradually$leads$to$more$wealth$inequality,$because$they$enable$the$
ruling$classes$to$extract$profit$at$the$expense$of$the$working$class$(human$resources)$and$the$planet$
(natural$resources).$French$economist$Thomas$Piketty$and$his$research$team$have$partly$explained$
this$gradual$inequality$increase$in$Capital$in$the$21st$Century$with$the$formula$r$>$g,$i.e.$if$return$on$
capital$is$higher$than$economic$growth,$then$inequality$rises.$Piketty$proposes$a$global$system$of$
progressive$wealth$taxes$to$help$reduce$inequality$and$avoid$the$vast$majority$of$wealth$coming$
under$the$control$of$a$tiny$minority.$
$
I$do$not$agree$with$his$solution$to$the$problem,$because$it$is$a$superficial$one,$which$does$not$
address$the$other$two$observations:$gradual$inflation$and$the$value$system$behind$currencies.$All$
currencies$loose$in$value$over$the$course$of$time$until$they$are$rendered$almost$valueless$at$the$
expense$of$those$who$sell$their$workforce$instead$of$having$been$able$to$acquire$physical$wealth,$
that$is$real$estate.$Cryptocurrencies$are$not$an$exception$to$this$rule$as$the$future$will$show$despite$
the$gold$rush$on$Bitcoin,$which$essentially$gives$profits$to$those$who$can$generate$electricity$
cheapest.$They$will$follow$the$trajectory$of$the$USD$at$a$much$faster$pace$and$thus$confirm$that$all$
currencies$which$create$scarcity$have$only$a$limited$lifespan.$In$the$case$of$the$USD$inflation$
between$1981$and$2009$was$50%;$and$it$lost$2/3$of$its$value$between$1961$and$1981.$What$does$
this$mean$exactly?$$
$
It$means$that$somebody$who$inherited$land$from$her$parents$in$1981$worth$USD$100k$added$USD$
100k$nominal$net$worth$–$not$taking$into$account$other$factors$contributing$to$real$estate$price$
fluctuations.$Somebody$who$earned$1981$USD$100k$a$year$would$have$to$make$USD$200k$payroll$
as$of$2009$to$be$able$to$afford$the$same$things$he$was$back$in$1981.$Statistical$records$show$though$
that$wages$have$not$increased$in$purchasing$power$parity,$but$quite$on$the$contrary$melted$like$the$
Arctic$ice$shield$under$climate$change.$$
$
The$Economic$Policy$Institute$(EPI)$writes:$$M,&/2%(!+-!.$%!%'-15./59&(%2-.'&(!2//.!/<!2+-+&,!+&*/3%!
+&%;9'0+.18!-0/#!0+)+&,5-.'&('2(-!,2/#.$8!'&(!'!$/-.!/<!/.$%2!K%1!%*/&/3+*!*$'00%&,%-N!.$%!&%'2!
-.',&'.+/&!/<!$/9201!#',%!,2/#.$!</2!.$%!)'-.!3'O/2+.1!/<!@3%2+*'&!#/2K%2-!/)%2!.$%!7'-.!,%&%2'.+/&E!
?"C!P0/#!'&(!9&%;9'0!#',%!,2/#.$!+&!2%*%&.!(%*'(%-!-.%3-!<2/3!'!,2/#+&,!#%(,%!6%.#%%&!/)%2'00!
72/(9*.+)+.1Q.$%!+372/)%3%&.-!+&!.$%!'3/9&.!/<!,//(-!'&(!-%2)+*%-!72/(9*%(!7%2!$/92!#/2K%(Q'&(!
.$%!7'1!R#',%-!'&(!6%&%<+.-S!2%*%+)%(!61!'!.17+*'0!#/2K%2E!In$other$words,$the$American$elite$has$
kept$within$its$nation$most$of$the$productivity$gains$for$itself$instead$of$sharing$with$society$at$
large;$and$has$done$so$even$more$with$respect$to$the$ROW.!It$is$in$particular$China$which$follows$
Why$Bitcoin$Is$Both$A$Risk$for$Doom$And$An$Opportunity$For$Transformation:$$
Reporting$on$The$Chinese$Manufacturing$Industry$Behind$Cryptocurrencies!!!!!!!!!!!!!!
2018$(c)$telospi.com$$ $
10$
this$American$concept,$despite$being$at$least$since$a$century$undetermined$whether$it$should$
befriend$and$imitate$or$hate$and$destroy$its$Pacific$adversary.$$$
$
$
$
Bitcoin$sadly$repeats$a$broken$system.$It$makes$those$who$have$access$to$it$wealthy,$those$who$
don’t$are$left$behind$and$all$this$happens$at$an$enormous$ecological$cost,$confirming$once$more$that$
social$and$environmental$problems$are$intrinsically$connected$with$each$other.$Niall$Ferguson$
came$to$a$similar$conclusion$when$he$wrote$in$The$Ascent$of$Money$on$the$origins$and$effects$of$
hedging:$F$%!<'*.!&%)%2.$%0%--!2%3'+&-!.$'.!.$+-!<+&'&*+'0!2%)/09.+/&!$'-!%<<%*.+)%01!(+)+(%(!.$%!#/20(!
+&!.#/N!.$/-%!#$/!'2%!R/2!*'&!6%S!$%(,%(8!'&(!.$/-%!#$/!'2%!&/.!R/2!*'&&/.!6%SE!T/9!&%%(!3/&%1!./!6%!
$%(,%(E$What$has$changed$though$is$the$currency$life$cycle$duration.$While$national$fiat$currencies$
might$have$lasted$centuries$or$decades,$Bitcoin$won’t$last$that$long$because$it$has$reintroduced$a$
physical$representation$which$makes$it$impossible$to$not$recognize$the$exploitation$of$related$
resources.$$
$
Silver$and$gold$were$the$most$widely$used$natural$resources$which$were$minted$into$coins$since$
600$BC.$The$scarcity$of$the$metals$was$represented$in$their$value$as$payment$and$so$was$the$value$
of$our$currencies$by$their$representation$in$the$metals.$It$was$the$year$1971,$when$we$basically$lost$
the$direct$connection$between$our$currencies$and$their$physical$representation.$The$USD$was$
decoupled$from$gold$and$all$countries$on$this$planet$followed$en$suite,$Switzerland$being$the$last$
country$to$decouple$from$gold$only$in$1999.$The$results$can’t$be$more$highlighted:$we$have$lost$our$
framework$of$reference$for$what$we$extract$from$the$planet.$This$observation$is$most$poignantly$
put$into$words$by$economist$E.F.$Schumacher$who$wrote$only$two$years$later$in$Small$is$Beautiful:$
Economics$as$if$People$Mattered:$$
$
1/21/18 2017%©%telospi.com 10
Why$Bitcoin$Is$Both$A$Risk$for$Doom$And$An$Opportunity$For$Transformation:$$
Reporting$on$The$Chinese$Manufacturing$Industry$Behind$Cryptocurrencies!!!!!!!!!!!!!!
2018$(c)$telospi.com$$ $
11$
F$%!+009-+/&!/<!9&0+3+.%(!7/#%2-8!&/92+-$%(!61!'-./&+-$+&,!-*+%&.+<+*!'&(!.%*$&/0/,+*'0!'*$+%)%3%&.-8!
$'-!72/(9*%(!.$%!*/&*922%&.!+009-+/&!/<!$')+&,!-/0)%(!.$%!72/60%3!/<!72/(9*.+/&E!F$%!0'..%2!+009-+/&!+-!
6'-%(!/&!.$%!<'+092%!./!(+-.+&,9+-$!6%.#%%&!+&*/3%!'&(!*'7+.'0!#$%2%!.$+-!(+-.+&*.+/&!3'..%2-!3/-.E!
U)%21!%*/&/3+-.!'&(!69-+&%--3'&!+-!<'3+0+'2!#+.$!.$%!(+-.+&*.+/&8!'&(!'770+%-!+.!*/&-*+%&.+/9-01!'&(!
#+.$!*/&-+(%2'60%!-96.0%.1!./!'00!%*/&/3+*!'<<'+2-!V!%B*%7.!#$%2%!+.!2%'001!3'..%2-N!&'3%018!.$%!
+22%70'*%'60%!*'7+.'0!#$+*$!3'&!$'-!&/.!3'(%8!69.!-+3701!</9&(8!'&(!#+.$/9.!#$+*$!$%!*'&!(/!
&/.$+&,E!?"C!
!
@!69-+&%--3'&!#/90(!&/.!*/&-+(%2!'!<+23!./!$')%!-/0)%(!+.-!72/60%3-!/<!72/(9*.+/&!'&(!./!$')%!
'*$+%)%(!)+'6+0+.1!+<!$%!-'#!.$'.!+.!#'-!2'7+(01!*/&-93+&,!+.-!*'7+.'0E!A/#8!.$%&8!*/90(!#%!/)%20//K!.$+-!
)+.'0!<'*.!#$%&!+.!*/3%-!./!.$'.!)%21!6+,!<+238!.$%!%*/&/31!/<!P7'*%-$+7!U'2.$!'&(8!+&!7'2.+*90'28!.$%!
%*/&/3+%-!/<!+.-!2+*$!7'--%&,%2-=!W&%!2%'-/&!</2!/)%20//K+&,!.$+-!)+.'0!<'*.!+-!.$'.!#%!'2%!%-.2'&,%(!
<2/3!2%'0+.1!'&(!+&*0+&%(!./!.2%'.!'-!)'09%0%--!%)%21.$+&,!.$'.!#%!$')%!&/.!3'(%!/92-%0)%-E!
$
Bitcoin$has$stepped$up$the$exploitation$of$natural$resources$and$accelerates$this$process$by$the$day.$
But$it$has$reintroduced$a$commodity$representation$since$its$value$is$pegged$to$the$price$of$
electricity,$which$like$gold$or$silver$is$a$physical$commodity.$We$will$therefore$again$see$directly$–$
not$only$indirectly$-$what$has$been$hidden$from$us$for$almost$50$years:$that$an$economic$system,$no$
matter$by$which$currency$it$is$represented,$which$is$based$on$scarcity,$profit$extraction,$ignorance$
and$competition$will$eventually$lead$to$environmental$degradation$and$social$dissolution.$$
$
$
$
Three!Reasons!Why!Bitcoin!Won’t!Last!
$
Shortening*Currency*Life*Cycle
1/21/18 2017%©%telospi.com 9
Currency
From%
To
Physical)representation
Val ue&0 1 /18
Silver
600#BC
Ye s $
-Silver
USD$554/kg
Gold
600#BC
Ye s $
-Gold
USD$42.873/kg
USD$
-Gold
1792
1971
Ye s $
-Gold
USD$
-Fiat
1971?
No
CNY
1949
No
6.41%USD
EUR
2002
No
0.82
USD
Bitcoin'
2009
Ye s $
-Electricity
USD
11.664
Why$Bitcoin$Is$Both$A$Risk$for$Doom$And$An$Opportunity$For$Transformation:$$
Reporting$on$The$Chinese$Manufacturing$Industry$Behind$Cryptocurrencies!!!!!!!!!!!!!!
2018$(c)$telospi.com$$ $
12$
Now,$there$are$three$reasons,$why$I$believe$that$Bitcoin$will$be$gone$in$latest$three$years$from$now.$
Firstly,$it$is$not$in$the$interest$of$the$Chinese$government$to$let$Bitcoin$grow$into$a$genuine$rival$to$
its$own$currency.$Here$I$add$my$own$political$conspiracy$theory,$because$after$all$what$I$have$seen$
down$here$in$Shenzhen,$it$is$more$than$plausible$that$Beijing$plays$for$time,$assuming$that$the$
already$shaken$US$economy$will$falter$and$crash$earlier$than$its$own$under$the$pressure$of$the$
crypto$currency$rush.$Despite$considering$to$ban$mining$farms$and$having$declared$ICOs$illegal$last$
September$there$are$no$changes$in$sales,$delivery$and$operation$of$mining$rigs.$$
$
We$all$know$that$Chinese$authorities$are$capable$of$executing$top$down$policies$sharply$if$they$
really$want$to.$But$this$policy$doesn’t$seem$to$be$an$executive$priority.$Harbin$born$Liu$Yan,$owner$
of$Yutong$Mining$Corp.,$tells$me$that$there$are$no$restrictions$whatsoever.$Bitmain’s$monthly$
production$volume$stands$at$70.000$mining$rigs$and$they$are$shipping$to$buyers$all$over$the$
country.$The$manager$at$Dexun$logistics$explains$that$his$company$alone$delivers$around$10.000$
Bitmain$products$–$not$limited$to$mining$rigs$–$a$day.$It$doesn’t$seem$that$Beijing$has$made$a$move$
yet,$but$surely$will$once$its$objective$is$reached.$We$witness$a$financial$cyber$war$which$is$fueled$by$
both$greed$for$power$and$fear$of$losing$it.$$
$
Secondly,$China$and$the$rest$of$the$world$can’t$afford$to$turn$a$blind$eye$to$the$enormous$energy$
consumption$for$both$transactions$and$mining.$Quartz$reports$that$*$%'7!%0%*.2+*+.1!+-!'!3'O/2!
'()'&.',%!</2!6+.*/+&!3+&%2-!+&!X$+&'E!X/'05'69&('&.!2%,+/&-!-9*$!'-!Y+&O+'&,!'&(!M&&%2!L/&,/0+'!
$')%!+&!2%*%&.!1%'2-!.'K%&!./!*217./!3+&+&,!'-!'!&+*$%!'772/'*$!./!.2'&-</23+&,!.$%+2!0%--5(%)%0/7%(!
%*/&/3+%-E!Z+.3'+&!$'-!.'K%&!'()'&.',%!/<!*$%'7!*/'05<+2%(!7/#%2!+&!.$/-%!.#/!2%,+/&-!./!69+0(!
-%)%2'0!/<!.$%!#/20(4-!0'2,%-.!3+&+&,!<'*+0+.+%-E!M&!M&&%2!L/&,/0+'4-!W2(/-!*+.18!0/*'0!'9.$/2+.+%-!/<<%2!
.$%!*/37'&1!'!-96-+(+:%(!%0%*.2+*+.1!2'.%!/<!O9-.![!\P!*%&.-!7%2!K+0/#'..!$/92E!F$'.4-!]^_!*$%'7%2!.$'&!
#$'.!+&(9-.2+'0!<+23-!+&!.$%!'2%'!.17+*'001!7'18!'&(!#%00!6%0/#!72+*%-!+&!.$%!\P!'&(!3/-.!U92/7%'&!
\&+/&!*/9&.2+%-![of$13$US$cent$and$more].$
$
The$flourishing$of$China’s$digital$mining$industry$accounting$for$2/3$of$the$global$volume$can$be$
also$understood$as$a$result$of$a$system$failure,$i.e.$a$highly$centralized$power$generation$which$fails$
to$produce$close$to$the$consumers.$Again$Quartz:$F$%!3'--+)%!$1(2/7/#%2!&%.#/2K-!+&!P+*$9'&!'&(!
T9&&'&!#%2%!69+0.!./!.2'&-<%2!%0%*.2+*+.1!./!.$%!2%-.!/<!.$%!*/9&.218!69.!-.'.%529&!,2+(!/7%2'./2-!.//!
/<.%&!<'+0!./!72+/2+.+:%!2%&%#'60%!%&%2,1!/)%2!*/'0E!M&!`^ab8!T9&&'&!#'-.%(!'!-.',,%2+&,!]`!6+00+/&!
K>$!R0+&K!+&!X$+&%-%S!/<!$1(2/7/#%28!'6/9.!%;9'0!./!.$%!./.'0!%0%*.2+*+.1!*/&-937.+/&!/<!J%&3'2K!.$%!
-'3%!1%'2E!
!
But$even$if$the$consumption$of$fossil$fuels$for$mining$is$eliminated$and$a$shift$to$renewables$is$
successful$as$hydropower,$geothermal$and$solar$farms$in$Austria,$Iceland$and$the$US$show,$there$
remain$important$questions$to$answer:$why$should$we$anyway$consume$huge$amounts$of$
electricity$to$solve$theoretical$calculations?$What$productivity$gain$do$we$actually$generate$for$
society$thereby?$Don’t$we$suffer$from$enormous$system$blindness$if$we$can’t$come$up$with$another$
proof$of$work$concept?$A$proof$of$work$performed$by$a$machine$which$you$just$plug$into$the$grid$
seems$to$be$no$proof$at$all.$Why$should$the$owner$of$that$machine$retrieve$any$reward$in$the$first$
place?$Isn’t$it$a$perverted$concept$to$engage$machines$to$create$“fiat$profit”$when$actually$only$
Why$Bitcoin$Is$Both$A$Risk$for$Doom$And$An$Opportunity$For$Transformation:$$
Reporting$on$The$Chinese$Manufacturing$Industry$Behind$Cryptocurrencies!!!!!!!!!!!!!!
2018$(c)$telospi.com$$ $
13$
excess$consumption$which$translates$to$destruction$of$natural$resources$takes$place$in$its$purest$
form,$that$is$energy?$Why$aren’t$we$able$to$create$a$currency$which$rewards$value$added$to$society,$
that$is$a$productive$benefit$to$people$or$planet,$which$does$not$come$at$the$expense$of$one$another?$$
$
And$this$leads$to$the$third$reason$for$Bitcoin’s$early$demise:$advancing$computing$power$and$
eventually$singularity.$Some$people$believe$that$singularity$is$still$far$out$in$space$and$time.$Some$
don’t$even$know$what$the$concept$entails.$But$we$can$certainly$assume$that$research$into$deep$
learning$microchips$by$companies$like$Bitmain$or$Intel$will$further$speed$up$computing$power.$
While$most$computers$still$operate$with$a$Central$Processing$Units$(CPU),$mining$rigs$and$state$of$
the$art$deep$learning$machines$use$Graphic$Processing$Units$(GPU).$Both$Bitmain’s$Sophon$and$
Intels$Neuromorphic$Processing$Unit$(NPU)$will$be$able$to$perform$calculations$beyond$the$digital$
zero$&$one$elements$and$open$the$door$into$the$era$of$quantum$computing.$$
$
Such$exponential$acceleration$of$computing$power$can$only$lead$to$two$outcomes$I$reckon.$One$is$a$
singularity$which$is$able$to$solve$all$calculations$in$no$time,$bringing$the$Bitcoin$system$to$a$sudden$
crash,$because$the$competition$between$computing$units$to$add$new$blocks$to$the$chain$is$
eliminated.$This$is$in$particular$interesting,$if$we$assume$that$singularity$entails$a$self-conscious$
collective$network$of$existing$computing$power$as$opposed$to$one$which$my$friend$Vasily$
envisioned$as$being$remotely$controlled$by$companies$like$Bitmain.$$
$
Two$is$an$ever-accelerating$system$of$calculations$which$can$be$only$compared$to$Pandora’s$box,$
which$mankind$opened$to$devour$this$planet.$The$Verge$writes$that$some$cryptocurrency$
entrepreneurs$believe$that$the$-#+.*$!./!,2%%&!3+&+&,!-%*./2-!+-!6/9&(!./!$'77%&E!Z9.!%)%&!+<!+.!(/%-8!
+.4-!9&0+K%01!./!.'K%!70'*%!2+,$.!'#'1E!I/--+0!<9%0-!#+00!2%3'+&!*$%'7!</2!.$%!</2%-%%'60%!<9.92%8!'&(!
6%..%2!2%&%#'60%!.%*$&/0/,+%-!.'K%!.+3%!./!(%)%0/7E!\&.+0!.$%&8!+.4-!'!3'..%2!/<!#$'.!-/*+%.1!)'09%-!.$%!
3/-.N!'&!'0.%2&'.+)%!*922%&*1!.$'.!3'1!,+)%!7%/70%!<2%%(/3!<2/3!6+,!6'&K-!Q!/2!0%--!*$'2+.'6018!#+0(!
72/<+.-!/&!*922%&*1!-7%*90'.+/&!at$the$expense$of$the$environment.$In$other$words,$it’s$a$matter$of$
what$humankind$is$motivated$by:$greed$or$compassion$for$the$environment.$$
$
$
3Reasons'Why'Bitcoin'Won’t'Last
Not$in$interest$of$Beijing
Ecologically)not)sustainable
AI#chips#will#bring#singularity
1/21/18 2017%©%telospi.com 11
Why$Bitcoin$Is$Both$A$Risk$for$Doom$And$An$Opportunity$For$Transformation:$$
Reporting$on$The$Chinese$Manufacturing$Industry$Behind$Cryptocurrencies!!!!!!!!!!!!!!
2018$(c)$telospi.com$$ $
14$
L/(%2&!3'&!(/%-!&/.!%B7%2+%&*%!$+3-%0<!'-!'!7'2.!/<!&'.92%!69.!'-!'&!/9.-+(%!</2*%!(%-.+&%(!./!
(/3+&'.%!'&(!*/&;9%2!+.E!A%!%)%&!.'0K-!/<!'!6'..0%!#+.$!&'.92%8!</2,%..+&,!.$'.8!+<!$%!#/&!.$%!6'..0%8!$%!
#/90(!<+&(!$+3-%0<!/&!.$%!0/-+&,!-+(%E!?UEIE!P*$93'*$%2C!
$
The$underlying$system$is$thus$much$larger$than$just$a$transformation$of$the$energy$sector$from$
fossil$fuel$based$to$renewables.$The$energy$sector$does$though$like$nothing$else$on$this$planet$
reflect$humankind’s$value$system:$a$distributed$and$global$network$of$sharing$or$isolated$patches$
of$inefficient$generation$and$wasteful$consumption.$Competition$based$incentives$inevitably$move$
towards$centralization$and$the$formation$of$oligopolies$or$worse,$a$monopoly.$This$is$clearly$visible$
in$China’s$long$term$plans$for$its$own$energy$infrastructure$which$rely$heavily$on$centralized$and$
independent$nuclear$power.$Bitcoin$is$a$resource$(energy)$token,$but$it$also$requires$that$you$
create$more$of$the$resource$to$be$able$to$mine$the$token.$One$observer$wrote$that$it$resembles$an$
energy$virus$with$a$built-in$dopamine$reward$for$its$hosts$based$on$how$much$energy$they$feed$it.$$
$
The$virus$is$though$clearly$in$the$mindset$and$value$system$of$Bitcoin$users.$If$we$continue,$the$
entire$output$of$human$activity$will$concentrate$on$building$energy$farms$to$feed$bitcoin.$A$
trajectory$which$defeats$the$purpose$of$having$more$renewable$energy$with$which$we$try$to$
replace$fossil$fuel$based$energy$sources.$A$trajectory$which$plays$though$into$the$hands$of$
governments$like$China$which$want$to$create$national$cryptocurrencies$that$are$fueled$by$infinite$
nuclear$power.$Such$a$crypto-CNY$would$be$indeed$an$iron$rice$bowl$and$bring$power$generation$
and$political$power$in$direct$correlation$until$the$externalities$of$generating$nuclear$power$have$to$
be$paid.$We$all$know,$that$paying$for$these$externalities$is$even$beyond$the$political$horizon$of$the$
CCP.$$$$$
$
Visionary$Aldous$Huxley$might$have$seen$this$future$when$he$wrote$in$1963$in$The$Politics$of$
Ecology$the$very$following:$P/3%!('18!0%.!9-!$/7%8!290%2-!'&(!290%(!#+00!62%'K!/9.!/<!.$%!*90.92'0!
72+-/&!?/<!09-.!</2!7/#%2C!+&!#$+*$!.$%1!'2%!&/#!*/&<+&%(E!P/3%!('1!EEE!@&(!3'1!.$'.!('1!*/3%!-//&c!
I/28!.$'&K-!./!/92!2'7+(01!'()'&*+&,!-*+%&*%!'&(!.%*$&/0/,18!#%!$')%!)%21!0+..0%!.+3%!'.!/92!(+-7/-'0E!
F$%!2+)%2!/<!*$'&,%!<0/#-!%)%2!<'-.%28!'&(!-/3%#$%2%!(/#&-.2%'38!7%2$'7-!/&01!'!<%#!1%'2-!'$%'(8!#%!
-$'00!*/3%!./!.$%!2'7+(-8!-$'00!$%'28!0/9(%2!'&(!%)%2!0/9(%28!.$%!2/'2+&,!/<!'!*'.'2'*.E!It$is$this$cataract$
which$I$hear$when$a$mining$rig$is$started$up$or$the$door$to$a$mining$farm$opens.$Every$new$mining$
rig$connected$to$the$grid$and$the$web$accelerates$the$destruction$of$the$planet$and$ultimately$
accelerates$our$self-destruction.$!
$
Blockchain!for!Social!Good!!
$
So,$what$ought$we$to$do?$What$can$we$do?$Zennon$Kapron,$author$of$Chomping$at$the$Bitcoin,$is$
lately$a$very$busy$and$much$coveted$speaker.$The$stellar$rise$of$Bitcoins$value$against$the$USD$and$
the$massive$Chinese$stakes$in$the$game$has$made$him$one$of$the$most$sought-after$guests$in$many$
events$throughout$the$world.$He$provided$this$January$an$overview$of$blockchain$applications$with$
a$positive$social$impact$and$categorized$them$into$four$groups:$political,$environmental,$social$and$
economic.$He$elaborated$on$a$few$examples$and$explained$that$there$are$lots$of$good$intentions$
Why$Bitcoin$Is$Both$A$Risk$for$Doom$And$An$Opportunity$For$Transformation:$$
Reporting$on$The$Chinese$Manufacturing$Industry$Behind$Cryptocurrencies!!!!!!!!!!!!!!
2018$(c)$telospi.com$$ $
15$
visible$like$Ethereum$establishing$itself$as$a$substitute$for$government$and$law$industry$bound$
contracts.$$
$
He$concludes$.$'.!.$%!7/.%&.+'0!'770+*'.+/&-!/<!Z0/*K*$'+&!</2!-/*+'0!,//(!'2%!)'2+%(!'&(!%B*+.+&,8!
$/#%)%2!+.!'0-/!$'-!+.-!0+3+.'.+/&-E!Z0/*K*$'+&!/<<%2-!'!7/#%2<90!3%*$'&+-3!./!+&*%&.+)+:%!.29.$8!
+&*2%'-%!.2'&-7'2%&*18!'&(!$'-!.$%!7/.%&.+'0!./!3'K%!)'2+/9-!'-7%*.-!/<!-/*+%.1!#/2K!6%..%28!69.!+.!
*'&&/.!62+&,!'6/9.!*$'&,%!'0/&%E!M&!/2(%2!./!62+&,!'6/9.!0'-.+&,!*$'&,%8!'!)'2+%.1!/<!-.2'.%,+%-!'&(!
2%,90'.+/&!#+00!6%!2%;9+2%(!<2/3!6/.$!,/)%2&3%&.-!'&(!*/27/2'.+/&-E!@-!#+.$!'&1!&%#!'&(!(%)%0/7+&,!
.%*$&/0/,18!*16%2-%*92+.1!+-!/<!7'2'3/9&.!+37/2.'&*%E!Z0/*K*$'+&!72/3+-%-!./!6%!(%*%&.2'0+:%(!'&(!
-/3%#$'.!d9&5$'*K'60%48!1%.!.$%!.%*$&/0/,1!2%3'+&-!9&.%-.%(!'.!-*'0%E!!
$
What$Zennon$points$at$goes$beyond$technology.$It$never$is$technology$alone$that$brings$about$
change,$but$always$its$interaction$with$human$intention$and$our$underlying$value$systems.$Do$we$
want$technology$to$serve$building$a$better,$fairer,$one$global$or$many$national$societies?$And$
recalling$my$conversation$with$Vasily$about$Alfred$Adler’s$individual$psychotherapy,$are$we$
motivated$in$the$application$of$technologies$by$power,$pleasure$or$purpose?$It$seems$as$if$Bitcoin$
has$for$the$time$being$confirm$that$Freud$was$wrong,$because$man$is$clearly$not$motivated$by$
pleasure$as$he$claimed,$neither$by$purpose$as$Frankl$said,$but$by$power$as$Freud’s$contemporary,$
Alfred$Adler,$explained$in$his$theory$of$individual$psychology.$Power$politics$-$as$we$have$seen$
before$–$don’t$go$well$with$environmental$protection$and$solidarity.$$
$
$
How!to!Build!a!Sustainable!Civilization?!
$
We$have$to$ask$though$what$it$takes$to$build$a$society$which$motivates$social$cohesion$and$the$
protection$of$the$environment.$Niall$Ferguson$asks$this$question$to$a$certain$extent$in$Civilization$–$
The$West$and$the$Rest.$He$argues$in$a$retrospective$POV$that$six$novel$complexes$of$institutions$
POWER
Alfred'Adler'Individual)Psychology
PLEASURE
Sigmund(Freud(-Psychoanalysis
PURPOSE
Viktor'Frankl -Logotherapy
Calibrating*Motivation
1/21/18 2017%©%telospi.com 12
Why$Bitcoin$Is$Both$A$Risk$for$Doom$And$An$Opportunity$For$Transformation:$$
Reporting$on$The$Chinese$Manufacturing$Industry$Behind$Cryptocurrencies!!!!!!!!!!!!!!
2018$(c)$telospi.com$$ $
16$
and$associated$ideas$and$behaviors$distinguished$the$West$from$the$rest$and$were$causal$for$the$
European$world$dominance$for$the$last$500$years.$These$killer$applications$are$competition,$
science,$property$rights,$medicine,$consumer$society$and$work$ethic.$$
$
Ferguson’s$six$K+00%2!'77-$are$if$without$proper$guidance$by$sound$values$what$Fergusson$calls$
them:$killer$apps.$Apps$which$exterminated$the$populations$on$the$North$and$South$American$
continents,$apps$which$enslaved$Africa$and$large$swaths$of$Asia,$apps$which$led$to$two$world$wars$
and$holocaust.$We$can$of$course$apply$competition,$science,$property$rights,$medicine,$consumer$
society$and$work$ethic$in$the$service$of$humanity,$but$if$we$lack$compassionate$purpose,$all$these$
apps$go$mad.$And$this$is$exactly,$what$is$happening$in$particular$in$Beijing$and$Shenzhen,$where$a$
commercial$craze$for$AI$is$driven$by$a$political$elite$which$is$motivated$by$global$domination$and$
undoing$what$500$years$of$Eurocentrism$have$inflicted$upon$the$Chinese:$the$century$of$
humiliation$|$百年国耻.As$a$result$the$African$continent$has$been$turned$by$China$into$one$large$
physical$mine,$which$fuels$the$excavation$of$a$vast$spiritual$void.$$
$
$
$
It$makes$therefore$much$more$sense$to$talk$about$seven$0+<%!'77-!instead.$Lets$exchange$work$ethic$
with$meritocracy,$eliminating$nepotism$and$neurotic$workaholics,$competition$with$cooperation,$a$
higher$form$of$play,$science$with$humor,$because$science$is$a$product$of$curiosity$and$cooperation;$
and$the$mad$scientist$is$one$who$has$no$sense$of$humor;$lets$exchange$property$rights$with$open$
source;$the$consumer$society$with$a$basic$income$and$lets$add$education$and$compassion;$then$we$
have$the$apps$which$we$will$need$to$build$a$common$future.$Blockchain$can$be$the$technology$to$
Why$Bitcoin$Is$Both$A$Risk$for$Doom$And$An$Opportunity$For$Transformation:$$
Reporting$on$The$Chinese$Manufacturing$Industry$Behind$Cryptocurrencies!!!!!!!!!!!!!!
2018$(c)$telospi.com$$ $
17$
run$these$apps,$but$we$need$to$flip$the$principles$of$human$motivation$in$our$economic$system$in$
order$to$make$it$a$good$technology,$and$design$the$proof$of$work$on$this$new$foundation.$$
$
The$theoretical$physicist$Freeman$Dyson$once$said$that$.%*$&/0/,1!+-!'!,+<.!/<!e/(E!@<.%2!.$%!,+<.!/<!
0+<%8!+.!+-!7%2$'7-!.$%!,2%'.%-.!/<!e/(f-!,+<.-E!M.!+-!.$%!3/.$%2!/<!*+)+0+:'.+/&-8!/<!'2.-!'&(!/<!-*+%&*%-E!
Despite$my$sincere$conviction$that$technology$can$be$applied$the$way$Dyson$puts$it,$I$would$argue$
with$him$and$declare$compassion$and$kindness$the$greatest$of$God’s$gifts$and$indeed$the$mother$of$
civilizations.$Societies$which$lack$compassion$and$kindness$turned$throughout$history$into$man$
and$beast$divulging$monstrosities.$Our$scientific$and$technological$powers$have$increased$to$such$
an$extent$that$our$lack$of$compassion$toward$the$planet$will$soon$turn$against$ourselves.$$
$
On!the!Urgency!of!and!the!Opportunity!for!Transformation!
$
Bitcoin$holds$a$mirror$into$our$face,$no$matter$whether$Satoshi$Nakamoto$designed$the$currency$
deliberately$being$pegged$to$electricity$or$not.$Its$inception$and$rapid$proliferation$accelerates$our$
financial$systems,$shortens$the$life$cycle$of$currencies,$puts$enormous$pressure$on$both$natural$
resources$and$energy$generation$infrastructure$and$shows$without$mercy$that$we$have$designed$
our$societies$on$the$basis$of$scarcity,$ignorance,$competition$and$greed.$With$an$increasing$number$
of$Bitcoin$users,$the$negative$impact$on$our$planet$grows$exponentially$since$the$mechanics$of$the$
system$motivate$more$and$more$people$to$lift$themselves$into$a$higher$economic$status,$which$in$
return$requires$more$resources:$impact$=$resources$*$economic$status$*$population$(i$=$r$*$e$*$p).$
$
It$is$in$under$this$threat$of$extinction$that$humanity$can$manage$a$turnaround$and$renew$itself$from$
the$very$core.$It$is$by$finding$a$common$denominator$in$our$survival$that$we$can$understand$that$
only$a$transformation$of$our$very$own$self$towards$compassion,$charity$and$cooperation$will$result$
in$abundance$for$all.$$
$
$
Value&Systems&Behind&Currencies
1/21/18 2017%©%telospi.com 15
Traditional
Social
Scarcity
Abundance
Competition
Cooperation
Greed
Charity
Ignorance
&"system"blindness
Compassion)&)system)awareness
Extracted)Profit)from)People&Planet
Added$Value$to$
People&Planet
Not$sustainable$ Sustainable
Why$Bitcoin$Is$Both$A$Risk$for$Doom$And$An$Opportunity$For$Transformation:$$
Reporting$on$The$Chinese$Manufacturing$Industry$Behind$Cryptocurrencies!!!!!!!!!!!!!!
2018$(c)$telospi.com$$ $
18$
$
Video$sources:$
Techcashhouse:$Does$Bitcoin$mining$still$pay$off?$January$1st$Update$
Gordon$Gekko:$Greed$is$Good$
Desperate$Housewives$on$Bitcoin:$How$does$it$work?$
World$Economic$Forum:$The$electricity$required$for$a$single$Bitcoin$trade$could$power$a$house$for$
a$whole$month$
$$
Sources$on$blockchain:$
https://techcrunch.com/2017/10/16/mapping-the-blockchain-project-ecosystem/$$
https://www.treehugger.com/economics/forget-bitcoin-its-blockchain-might-change-
everything.html$$
https://www.crypto-economy.net/everything-need-know-blockchain-technology/?lang=en$$
$
Sources$on$bitcoin$and$cryptocurrencies:$
https://www.metalandthings.com/$-$insane$retailer$of$money$making$machines$
https://qz.com/1174091/china-wants-an-orderly-exit-from-bitcoin-mining/$$
http://fortune.com/2017/09/05/china-bitcoin-blockchain-ico-ban/$$
https://news.bitcoin.com/close-look-haobtc-mining-farm-china/$$
http://hackingdistributed.com/2018/01/15/decentralization-bitcoin-ethereum/$$
$
Sources$on$bitcoin$and$energy$consumption$
https://qz.com/1172632/chinas-dominance-in-bitcoin-mining-under-threat-as-regulators-hit-
where-it-hurts-electricity/$$
https://www.theverge.com/2017/12/21/16806772/bitcoin-cryptocurrency-energy-consumption-
renewables-climate-change$$
https://thebitcoinnews.com/a-visit-to-a-bitcoin-mining-farm-in-sichuan-china-reveals-troubles-
beyond-regulation/$$
http://www.mycountryandmypeople.org/01-blog-2133823458/captain-planet-and-the-planeteers$$
http://world-nuclear.org/information-library/current-and-future-generation/plans-for-new-
reactors-worldwide.aspx$$
$
Sources$on$big$data:$$
Susan$Etlinger:$What$to$do$with$all$this$big$data?$$$
$
Sources$on$money:$
97%$Owned$
Let’s$Make$Money$
The$Ascent$of$Money$
Zeitgeist$
Evasion$Fiscale
ResearchGate has not been able to resolve any citations for this publication.
ResearchGate has not been able to resolve any references for this publication.