Pushing Back on Protos

By Sal Bayat,

12/7/2023

Holding Water for Miners

On November 29, 2023,  Alex de Vries of the Digiconomist Website published a study in the journal ‘Cell Reports Sustainability’ titled ‘Bitcoin’s growing water footprint’.  One of the study’s more shocking environmental conclusions was used as the title of a BBC article that discussed the research.  Given Bitcoin’s environmental image problem, we shouldn’t be surprised that ‘Every Bitcoin payment 'uses a swimming pool of water'’ was not well received by the crypto faithful.

This brings us to the case of the crypto industry propaganda outlet Protos.com, and the article ‘BBC mocked for ‘unfair’ Bitcoin mining article’ written by their Head of Research, Bennett Tomlin.  The piece is written in such a way that a passerby could mistake it, and Tomlin would no doubt defend it, as neutral. However, closer inspection is instructive.


Attack and Undermine

Tomlin starts off the article by calling into question the legitimacy of de Vries’ work.  Not only does Tomlin use scare quotes around the word “study” when describing the research paper, but the original version suggested it was not peer-reviewed, a claim which was later retracted.

In the first few paragraphs, we’re greeted with an attempt to delegitimize the data and methodology used by de Vries, thanks in no small part to the heavy lifting done by the word ‘assumption’. It’s subtly suggested to the reader that the work isn’t in any way scientific or quantitative, rather it’s just some Dutch guy throwing darts at an Excel spreadsheet.

Tomlin says as much himself.

“What this demonstrates is that our final calculated number both for energy consumption and water consumption ends up quite sensitive to assumptions that we have reason to think are not precise, but the true disagreement is deeper.”

This is an odd presentation of the facts, considering that de Vries goes to lengths to explain his data and methods. Tomlin never mentions that the study’s methods were in fact modeled on other peer reviewed work. More bizarre is the focus on, and criticism of, ‘assumptions’ forced onto researchers, as they are attempting to analyze and measure the waste produced by organizations that actively fight against transparency.

We can’t get perfect data on the use of water and electricity in crypto mining because Miners won’t give it to anyone! This is like criticizing an FBI report on drug cartels because they don’t know exactly how many people the cartels murder.

“I’m sorry Special Agent, what this demonstrates is that the final calculated economic cost of cartel violence is quite sensitive to assumptions that we have reason to think are not precise.”

If Tomlin is so distraught by the lack of good data, why didn’t he propose that mining facilities be legally required to disclose metrics around water and power?  Instead the self-professed ‘crypto critic’ frames assumptions forced on researchers as evidence of methodological malpractice.

Also interesting is the fact that Tomlin chose not to mention the assumptions that de Vries made in favor of crypto Miners.  The calculations for the direct water footprint are likely an underestimate since de Vries used numbers based on larger Bitcoin mining facilities which are more efficient in their use of water.

Cry Foul

Tomlin repeats the crypto talking point that per-transaction resource usage can’t be criticized because the energy usage is constant no matter the number of transactions.  Well, thank you for admitting that Bitcoin has nothing to do with useful work, but it’s Bitcoin’s proponents who open themselves up to the criticism of transaction costs.  

By never shutting up about transactional claims, that it helps El Salvadorian farmers live a life of financial freedom, frees laborers from onerous fees on remittances, and lets Afghan girls pay for an otherwise unobtainable education, Bitcoin’s boosters make the claim that the cost of Bitcoin transactions are worth it.

People dressing up investment fraud as financial salvation can’t have it both ways!  If you make claims about Bitcoin’s ability to let people transact, then criticisms of transactional costs are entirely appropriate.

Claiming that transactions aren’t the point of Bitcoin in the very next breath, which is something critics have been screaming for years, is so deeply cynical and dishonest that it makes a mockery of the term ‘moving the goalposts’. Rather, like the intrinsic value of a bitcoin itself, the goalposts don’t even exist.

There Can Be Only Two

Tomlin’s critique does an excellent job of dancing the ‘both sides’ jig, a classic disinformation technique that attempts to muddy the waters on what’s already crystal clear.  Tomlin distorts the issue and re-frames it as a simple disagreement between two equally legitimate sides, who have a difference of opinion.  In the author’s words:

“It is possible then that good-faith actors on both sides are honestly trying to assess (environmental costs of the system)/(use of the system) but are just disagreeing on what the use of the system looks like.”

Where Tomlin and I agree is that “the true disagreement is deeper”.

Bitcoin’s costs will always outweigh whatever benefits that exist. It is a property of the system. Bitcoin does not create anything except bitcoin, at an enormous and unnecessary cost.  Bitcoin asks for an investment of money upfront, gives you a token, and lets you claim your returns from the funds contributed by later investors.

Within the confines of investment fraud, you can find edge cases for useful work, as Tomlin points out in his article.  However, the amount of economic production will always be less than if you had just used that money directly for economically productive means.

Bitcoin offers nothing. In no way does it provide more useful or better functionality than existing systems.  Instead, it has upfront costs in terms of demands for investment in the form of electricity, and environmental externalities for which no one is currently paying. All for what exactly? Speculative and extractive finance?


Negative Sum Games

Bitcoin lacks any connection to real-world economic productivity.  Nothing intrinsic in the protocol connects it back to economic production.  Bitcoin is intrinsically worthless.

Yet the nature of the system isn’t discussed in Tomlin’s piece, and the objectively measured heavy costs of this social cancer are presented as opinion rather than fact.

The framing of this issue as a debate between two sides with equally valid opinions, some who say its costs outweigh its benefits, and others who have the opposing view, is to purposefully ignore the facts and misunderstand the nature and character of the system.

That Tomlin would present the matter in this way, means either that he earnestly does not understand Bitcoin’s fundamentals, or that he is no critic.  Either way, his views serve the interests of the cryptocurrency cartel.

Good faith actors on both sides indeed.  

Given the PR nightmare that Bitcoin’s social and environmental costs produce, pushing back on facts that support this reality is the most important work that shills can perform to please their masters.  The truth is that the almost 15-year-old “technology” (investment fraud) is vulnerable, and the cryptocurrency cartel knows it. That de Vries shone a spotlight on Bitcoin’s incredible wastefulness during the COP28 climate change summit, where Bitcoin lobbyists are attempting to influence policymakers, all but guaranteed the vigorous defense of the indefensible.

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