Bitcoin's Hidden Costs
Bitcoin's Hidden Costs
(Bloomberg) -- Welcome to Bloomberg Opinion Today, an afternoon roundup of our opinions on business, politics, markets, technology and more. New subscribers can sign up here. To view in your browser, click here.
ICYMI
Stocks and bonds fell. Kushner Cos. chased Qatar cash. Shari Redstone beat Les Moonves in court.
Burning For Bitcoin
Blockchain is kind of a waste of energy.
I mean that literally: A new study by Dutch blockchain expert Alex de Vries estimates Bitcoin alone uses nearly as much electricity as Ireland, with computers around the world ceaselessly trying to mine the stuff. Bitcoin is on track to use 1.8 percent of the planet’s electricity by next year, or more than today’s entire solar energy output, estimates Grist’s Eric Holthaus. Suck it up, Planet Earth; these Dunning-Krugerrands ain’t gonna mine themselves.
But this is also at least somewhat true figuratively. A recurring theme of Matt Levine’s newsletter (sign up here) is that blockchain enthusiasts keep reinventing wheels finance invented long ago. The latest brainchild: Bitcoin money-market funds. As Matt points out, a Bitcoin money-market fund a) risks “breaking the buck (the Bitcoin) with some frequency.” And b) it is kind of redundant and pointlessly complicated to hold Bitcoin in a money-market fund when you could just … hold Bitcoin.
Right now, not too many people are even doing that, and those who do fell off the top of a cryptomountain earlier this year:
This helps explain why none of Silicon Valley’s giants can be bothered to invest much time or effort into blockchain, suggests Lionel Laurent: “Sure, big tech companies and big banks probably suffer from the innovator’s dilemma, and lean towards conservatism. But the promised crypto-revolution hasn't materialized either.”
Bitcoin makes fools of skeptics with enough regularity to make me wary of mocking it too much (any more). Oh, why not? Let’s all laugh again at this patent Michael Regan found a few years ago, for a dog figurine to hide your Bitcoin key:
Crypto Dog? That’s definitely worth the energy.
The Bloomberg View
Venezuela is holding an “election” this Sunday. It will be a sham, Bloomberg’s editors write. President Nicolas Maduro’s ineptitude and corruption have been so thorough that Venezuela’s economy is collapsing, despite it having more proven oil reserves than Saudi Arabia. All we can do now is hope the government collapses quickly and try to clean up the pieces. It’s just that bad.
President Donald Trump has built high expectations for his North Korea summit, Bloomberg’s editors point out. He should lower those expectations now, give no ground, and make sure he has a plan in the event the summit fails.
Details, Details
Tim O’Brien has read through Trump’s latest financial-disclosure form so you don’t have to. And there's a lot more of interest there than just the apparent admission that the president reimbursed lawyer/fixer/Coen Brothers character Michael Cohen's porn-star hush money:
“All 92 pages — in line after mind-numbing line describing the hodgepodge of shell companies, trademarks, licensing deals, skyscrapers, golf courses and other assets that the president owns or draws income from — remind us just how deeply conflicted he is.”
If all of this makes you yearn to replace Trump in 2020 with a traditional, boring president, then Jonathan Bernstein (in his newsletter) is right there with you: "Maybe it's time for a little boredom."
Forget the Robots
For all we worry about robots taking our jobs, we're ignoring the far more impactful issue of the steady aging of the work force, writes Tyler Cowen. It’s a challenge, in that managers and society must stop catering mainly to the young as they do now. But it’s also an opportunity: “I would suggest that the ability to spot, mobilize and deploy older workers is the next biggest source of competitive advantage in the U.S."
What Wage-Price Spiral?
The standard model of economic cycles, roughly, holds that as the economy improves, wages rise, then prices rise to match them, then the Fed raises interest rates to stop inflation, then the economy weakens, at which point the Fed cuts rates until the economy improves and the whole cycle begins again.
But that really doesn’t tell the whole story, writes Noah Smith. It certainly doesn’t apply to the current stage of the cycle, in which wages are rising, but inflation isn’t. The Fed would make a huge mistake in raising rates too much now, under the assumption that inflation is definitely going to rise just because wages are.
Businesses, meanwhile, need to stop moaning about how hard it is to find good help and just raise wages already, writes Michael Strain.
Chart Attack
Since failing to close a $28 billion deal to buy Rockwell Automation Inc., Emerson Electric Co. has been crying all the way to the bank, writes Brooke Sutherland.
Wells Fargo & Co. still hasn’t gotten a handle on its compliance problems, warns Stephen Gandel.
Speed Round
Legalizing marijuana means we’ll lose data on racial bias in arrests. – Cathy O’Neil
There's reason to hope rising SUV sales don’t mean a big decline in fuel economy. – Justin Fox
There’s reason to hope rising bond yields don’t mean a big decline in stocks. – Robert Burgess
Italy’s populists want to have their cake and eat it too, just like Brexiteers. – Ferdinando Giugliano
Kickers
The Pope has a warning about credit default swaps. Working for Barclays is like working for McDonald’s. An AI tried to write this.
Note: Please send Big Macs, suggestions and kicker ideas to Mark Gongloff at mgongloff1@bloomberg.net.
To contact the editor responsible for this story: Timothy L. O'Brien at tobrien46@bloomberg.net.
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