BITCOIN-BUBBLE AND BIOSYTEM DISASTER

The December 2017 Investment Newsletterr addressed some reasons for equities ongoing increases. It also addressed Bitcoin, the bubble de jour in these halcyon days for market “froth.” 

Bitcoin, as we surely know, has hit the stratosphere. It is currently pegged at $17,600, and was trading at $17,270 at 16:00 hours today, Saturday, December 16, 2017. This site tracks bitcoin in real time.

Based upon the driving human emotions of economics, fear and greed, and observations of legion financial bubbles, a few will cleanup and most will get fleeced.  But that’s business as wise guys know it.  Sure, some will lose houses, life savings, pension-regrettable, but avoidable. . But the bigger world will be the earth’s atmosphere and depleting fossil fuels. Sound’s crazy, right? Here’s how.

BITCOIN MINING IS DONE IN BOTTOMLESS PITS

Remember that Bitcoin is a crypto currency with no physical. It “exists” on a huge peer-to-peer network.  Many Bitcoin Investors  (Author’s Disclosure: The Author’s own the equivalent of .2 Bitcoins in GBTC, a Bitcoin Investment Trust) “own” the Bitcoin. There are other ways to invest. The CBOE has begun futures trading in Bitcoins and there are institutions that wish to create Exchange Traded Funds (ETF) that will hold Bitcoin. There may also be RTS that short Bitcoins.  But if you have enough computing power, you can use computer to “mine it”.

But as we know, Bitcoin exists only as electrons, or as executable computer code. To mine it, you must have massive amounts of computing power to solve complex mathematical problems (“hashing algorithm” called SHA-256) with “brute force” computing power. These calculations require so much computing power that your systems must use profligate amounts of electricity and produce tremendous amounts of heat.  If your system crunches the hash algorithm more quickly, you earn some bitcoins. But we are not talking megawatts. The amount of electricity to mine Bitcoin is currently equivalent to the usage of Serbia. I exceeds that of the aggregate electic power use of many third world countries. By 2019, Bitcoin mining will use as much electricity as the US. And by November 2020, it will use the same amount as is currently used by the entire world.

Of course this usage curve is unsustainable. But where will it stop and when?  Perhaps the oldest of human emotions, fear and greed will crash the entire Bitcoin universe.

THE DESERT OF THE REAL IS  PRIME REAL ESTATE FOR SOLAR POWER.