Always strive to learn something useful. --Sophocles

Sometimes government has the people's best interest at heart. From the article: "B.C. Hydro CEO Christopher O'Riley had told the court in an affidavit that the data centers proposed by Conifex would have consumed 2.5 million megawatt-hours of electricity a year. That's enough to power and heat more than 570,000 apartments, according to data on the power provider's website."

Almost 600,000 apartments! And with very few jobs created. Lovely. By the way, a number of crypto mining operations are dropping crypto and turning to AI generation. Same rigs, running different software. Still consuming huge gobs of energy.

https://vancouversun.com/business/local-business/crypto-mining-company-loses-bid-to-force-bc-hydro-power

https://hardware.slashdot.org/story/24/02/06/221230/crypto-mining-company-loses-bid-to-force-canadian-utility-company-to-provide-power

Very interesting. Arrests have been made and a computer consulting firm responsible for maintaining systems in the court house has been fired.

The computer rig was not connected to the court's network - apparently it had its own "modems", but it was stealing a significant amount of power, which makes it a prosecutable offense. There is also no indication as to how long the rig had been running. I'm sure the investigation will uncover these points of information.

https://arstechnica.com/tech-policy/2023/11/secret-cryptomining-rig-found-hidden-in-the-floors-of-a-polish-court/

https://slashdot.org/story/23/11/21/2213231/massive-cryptocurrency-rig-discovered-under-polish-courts-floor-stealing-power

Are we surprised? I hear the sounds of lots of heads vigorously shaking 'no'.

There are two types, largely speaking, of crypto wallets: online and offline. An offline wallet is where the information is written to some sort of physical media and disconnected from any computer or internet connection unless you need to access the keys. Then you have to enter a long password or recovery phrase.

Well, these 'brilliant' people at Prime Trust created an encrypted physical key into which deposits were made, ultimately totaling almost $40,000,000US, including Etherium and Bitcoin. And the actual keys were burned onto titanium objects. At no time were paper or apparently electronic copies of the keys or recovery keys made.

And the physical recovery keys were lost.

And they didn't record the recovery phrases.

And now the money held in that wallet can never be recovered. You can only make X number of attempts before the device wipes out all the data.

Now, here's the great part. The company marketed itself as a "...crypto fintech company designed to help other startups offer crypto retirement plans, know-your-customer interfaces, ensure liquidity, and a host of other services. It says it can help companies build crypto exchanges, payment platforms, and create stablecoins for its clients. The company has not had a good few months. In June, the state of Nevada filed to seize control of the company because it was near insolvency. It was then ordered to cease all operations by a federal judge because it allegedly used customers’ money to cover withdrawal requests from other companies."

I would scream so loud if I found out that my retirement plan had any portion being invested in crypto!

https://www.404media.co/crypto-startup-prime-trust-files-for-bankruptcy-after-losing-password-to-38-9-million-crypto-wallet/

https://slashdot.org/story/23/08/26/0318207/crypto-startup-bankrupt-after-losing-password-to-389-million-physical-crypto-wallet

The first is the arrest of Faruk Ozer, a Turkish crypto exchange founder. The exchange collapsed, losing over $2B in "investments", and he fled. An Interpol red notice went out and he was caught and returned to Turkey for trial. Over 80 people were arrested in the collapse, including several of his relatives and friends.

https://www.coindesk.com/policy/2023/04/20/collapsed-turkish-crypto-exchange-thodexs-ceo-faruk-ozer-extradited-arrested-in-istanbul-report/

https://slashdot.org/story/23/04/20/2339229/collapsed-turkish-crypto-exchange-thodexs-ceo-faruk-ozer-extradited-arrested-in-istanbul


Next up, a Seattle startup's former CFO invested $35M of the company's money into a crypto platform that he controlled as a side business. Except that no one else knew or gave permission to move the money into a crypto fund. The fund went bust, all the money vanished.

The only bit of good news is that the company is very well-funded and will probably weather the loss.

https://www.seattletimes.com/business/seattle-startups-ex-cfo-accused-of-diverting-35m-losing-it-in-crypto-crash/

https://yro.slashdot.org/story/23/05/18/2148258/seattle-startups-ex-cfo-accused-of-diverting-35-million-losing-it-in-crypto-crash


In the EU, starting next year crypto exchange will require licensing, will have to report on energy consumption, and transactions on exchanges will have to be traceable. Person to person transactions aren't included in this, unless it is above EU$1,000.

From the article: "To better protect crypto investors, the EU's rules ensure that crypto assets can be traced—just like money transfers—and suspicious transactions can be blocked. They also provide "enhanced consumer protection and safeguards against market manipulation and financial crime," EU lawmakers announced. The rules do not apply to person-to-person transfers but do cover transactions above 1,000 euros from self-hosted wallets any time they connect to wallets hosted by crypto-assets service providers.

https://arstechnica.com/tech-policy/2023/05/landmark-crypto-rules-make-exchanges-liable-for-customer-losses-in-eu/

New report from the FBI says we set another record, up from $6.9B in '21, with crypto investment fraud nearly tripled.

The FBI operates the Internet Crime Complaint Center where people can report such activity, they logged 800,000 calls last year, or 2,000 A DAY. Phishing lead in complains at 300,000.

Wall Street Journal article, may be paywalled:
https://www.wsj.com/articles/americans-lost-a-record-10-3-billion-to-online-scammers-last-year-fbi-says-274d6139

https://news.slashdot.org/story/23/03/15/1435247/americans-lost-a-record-103-billion-to-online-scammers-last-year-fbi-says

Crypto mines consist of literally hundreds of PC servers. They need two things, lots of electricity to power them and lots of fan power to keep them cool.

And fans, especially LOTS of fans, generate a lot of noise!

China outlawed cryptomining because of the energy consumption. North Carolina, and many Southern states, have inexpensive power and loose regulations. And an increasing number of cryptomining operators. Residents complain of an almost constant 50+ decibel whine/hum from the mines that can go over 70 dB at times. And have taken to their local governments to issue noise abatement rules and fines and it's members of both political parties that are objecting.

https://www.cnn.com/2023/01/19/us/north-carolina-crypto-mine-noise-weir-wxc/index.html

This is kind of esoteric, but bear with me.

Bitcoin transactions (buying/selling items or transferring "money" between people) are tied to the transaction ledger. To spend Bitcoin (BTC), you transfer an amount - usually a fractional amount of a BTC to another person's wallet. That transaction has to be written to the blockchain to prove BTC moving from Wallet A to Wallet B. At any given time, hundreds or thousands of transactions are waiting to be committed to the blockchain. Until they're written, the funds are in a pending state.

Writing to the blockchain is a competition, it is the mining process. It's an insane computational nightmare that gets progressively more complex. Keep in mind that the BTC algorithm will only allow X number of BTC To be mined, and we're now at a significant percentage of X: once we hit 100%, no new BTC will ever again be produced - EVER. Lots of computer(s)/clusters are mining, competing to be the ones that get to commit the current batch of transactions to the blockchain for a given transaction cycle because there's a reward: they will have produced a batch of BTC! Obviously with the current value of BTC, even though it's taken a beating this year, it's pretty valuable. If you can sell it. Just like saying my comic book collection is really valuable according to the Overstreet Guide - if people will pay that amount. Good luck there!

Normally the transaction cycle commits approximately every ten minutes. Something happened and it took about 85 minutes at one point on Monday! That's one heck of a snafu! I'm curious if a delay of 8.5 times the norm results in a reward of 8.5 times the normal number of BTC.

Now here's the bad part. Apparently the new difficulty level means that a delay like this may happen every 34 days! So about once a month there's going to be a major hiccup in the transaction system and a nasty little delay creeping in.

And there are people who buy coffee and sandwiches with BTC? I think even a delay of 10 minutes to get the confirmation back is unacceptable. With a credit/debit card, the transaction is almost as fast as paying cash, or can be even faster.

While this was specific to Bitcoin, all cryptocurrencies have some form of blockchain system, though the details of their mining operation vary.

https://www.coindesk.com/business/2022/10/17/bitcoin-fails-to-produce-1-block-for-over-an-hour/

https://slashdot.org/story/22/10/17/2059211/bitcoin-fails-to-produce-1-block-for-over-an-hour

Bloomberg is reporting this as being part of the cryptocurrency $2billion freefall.

Yes, I would like to pay an outrageous amount of money for a digital receipt, thank you. May I have some more and how do I subscribe to your newsletter?

It ain't over yet, there was still almost half a billion in trades this month.

The Bloomberg article is semi-paywalled, they give you X number of free articles per month.

https://www.bloomberg.com/news/articles/2022-09-28/nft-volumes-tumble-97-from-2022-highs-as-frenzy-fades-chart

https://tech.slashdot.org/story/22/09/28/1427248/nft-trading-volumes-collapse-97-from-january-peak

Cleaning out browser tabs, this really summarizes my feeling on cryptocurrency:

Investor Warren Buffett addressed the annual shareholder meeting today for his multinational holding company Berkshire Hathaway — and said he still wouldn't buy bitcoin. But this time he gave a detailed explanation why. CNBC reports:

"Whether it goes up or down in the next year, or five or 10 years, I don't know. But the one thing I'm pretty sure of is that it doesn't produce anything," Buffett said.... "If you said... for a 1% interest in all the farmland in the United States, pay our group $25 billion, I'll write you a check this afternoon," Buffett said. "[For] $25 billion I now own 1% of the farmland... Now if you told me you own all of the bitcoin in the world and you offered it to me for $25 I wouldn't take it because what would I do with it? I'd have to sell it back to you one way or another. It isn't going to do anything... The farms are going to produce food...."

"Assets, to have value, have to deliver something to somebody. And there's only one currency that's accepted. You can come up with all kinds of things — we can put up Berkshire coins... but in the end, this is money," he said, holding up a $20 bill. "And there's no reason in the world why the United States government... is going to let Berkshire money replace theirs."

Later Saturday Berkshire Hathaway's vice chairman Charlie Munger had an even harsher appraisal of bitcoin. "In my life, I try and avoid things that are stupid and evil and make me look bad in comparison to somebody else — and bitcoin does all three," Munger said.

"In the first place, it's stupid because it's still likely to go to zero. It's evil because it undermines the Federal Reserve System... and third, it makes us look foolish compared to the Communist leader in China. He was smart enough to ban bitcoin in China."

Additionally, all of those computers consume an awful lot of electricity and generate a lot of heat. I could blather on, but I'm not going to bother.

This is a heck of a story.

Cryptocurrency is bound to a blockchain ledger that makes everything unchangeable, immutable. This concept is key to what happened. Everything that happens is bound to these blockchain ledgers. Once a transaction is posted to the immutable ledger, it's done. It cannot be changed. Well, sometimes it can, but it's extremely hard. And in this case, probably impossible.

Hashes are also a critical concept. It's sort of a checksum, a computed value that says that a particular value is valid and has not been tampered with. So you have a file, or token, that contains the transaction, plus a file that contains a hash of the transaction to validate it.

There's a third thing: wallets. Wallets are sort of like password managers, an electronic file that contains your cryptocurrency. I don't know if all cryptocurrencies have community wallets, this particular one does.

The Juno cryptocurrency had a problem. And at this point I'm just going to quote the article.

A community vote had decreed that around 3 million Juno tokens, worth around $36 million, be seized from an investor deemed to have acquired the tokens via malicious means. (This in itself was a big crypto news story.) The funds were to be sent to a wallet controlled by Juno token holders, who could vote on how it would be spent.

But a developer inadvertently copy and pasted the wrong wallet address, as reported by CoinDesk, leading to $36 million in crypto being sent to an inaccessible address.

What happened was the developer was sent the wallet address plus the hash of the address. Sadly, he entered the hash of the address, which is invalid. And it was written to the blockchain. And all them Juno coins are now forever inaccessible.

So the 'investor deemed to have acquired the tokens via malicious means' no longer has them, and neither does anyone else.

Cryptocurrency. Vanished into the bit bucket.

https://www.cnet.com/personal-finance/crypto/a-typo-sent-36-million-of-crypto-into-the-ether/