Dark side of Bitcoin mining

Started by chirkovmisha, Aug 15, 2022, 04:52 AM

Previous topic - Next topic

chirkovmishaTopic starter

Whenever I encounter a statement that starts with "Bitcoin is a currency...", I feel skeptical. Even if it's presented in official news or professional resources, such claims often turn out to be demagogic and misleading. People tend to spread myths and false information about cryptocurrencies, and as an educated consumer, I refuse to fall for it.

Let me explain why I think this way. Many promotional pitches from different cryptocurrency websites claim that their product is innovative and new. However, upon closer inspection, we find that the improvements they offer are either minimal or nonexistent. For example, while Bitcoin allows users to transfer money without relying on traditional banks, this doesn't necessarily make it superior to existing payment systems like PayPal. Moreover, the concept of creating value out of nothing has been around for centuries, as have ideas about remote banking.

Similarly, while cryptocurrencies like Litecoin and Ethereum offer some advantages, they don't necessarily represent a significant departure from existing financial tools. For instance, while Litecoin proponents claim that it enables near-zero cost payments across borders, similar benefits can be gained through existing international money transfer services. Likewise, while Ethereum builds decentralized applications, its core technology isn't fundamentally different from other blockchain-based systems.

All things considered, I don't think that cryptocurrencies like Bitcoin are necessarily better than traditional financial tools. While they may offer some benefits, their claims of being innovative or revolutionary are often overstated. Hence, as a consumer, I remain cautious and critical when evaluating such claims.

The process of converting cryptocurrency into a product, service, or traditional currency is not transparent, and institutions like tax authorities may still detect illegal use of funds. While anyone can theoretically mine Bitcoin, the process requires significant investment of time and resources. In practice, only a few individuals or groups can profit from mining. Furthermore, many individuals who invest in cryptocurrency receive little in return for their efforts, while the system itself relies on a constant influx of new users and transactions to remain viable.

There are also concerns about the motivations of those who promote cryptocurrency, as they often have a vested interest in attracting new users, regardless of the risks or benefits to those individuals. Some proponents of the technology may be involved in scams or other forms of fraudulent activity, and potential investors should exercise caution when considering such opportunities. In addition, even legitimate companies that operate within the cryptocurrency space may face challenges regarding regulation, security, and stability. Anyone considering investing in cryptocurrency should carefully weigh the potential risks and rewards before making a decision.


Bitcoin may not align with the values of some humanists, and there are distinct differences between it and traditional payment methods. These differences include:

- Transparent transaction records: All Bitcoin transactions are publicly visible, whereas PayPal transactions are private.
- Anonymous wallet ownership: It can be challenging to determine who owns a Bitcoin wallet, even with a court order, while PayPal will disclose user information upon request.
- Unfreezable funds: Bitcoin cannot be frozen, although exchanges for fiat currency can still be disrupted. In contrast, PayPal has the authority to freeze funds with one click.
- No restrictions on international payments: Bitcoin transactions do not require justification for cross-border transfers, and there are no limitations on exporting funds abroad.


Bitcoin's popularity can be attributed to its liquidity and uniqueness. It has replaced barter as a means of exchange, offering convenience and versatility. Unlike skins in video games, Bitcoin cannot be multiplied, and every unit is unique.

It's important to differentiate the economic nature of digital currency from the emotions tied to speculation. By doing so, we can better understand and appreciate its true value.


Gift cards and securities can be inconvenient and costly to exchange, whereas digital assets like video game skins require access to specialized platforms and fluctuate in value. On the other hand, Bitcoin is more liquid than these alternatives, with automatic exchange points and easy-to-use wallets available.

The convenience and accessibility of Bitcoin make it desirable to hold and use as a means of exchange and storage. This liquidity is an advantage in comparison to traditional forms of currency.

As someone with an economic education, I find cryptocurrencies intriguing for their potential as measures of value and means of circulation, as outlined by Marx's definition of money. However, I am not necessarily a Bitcoin enthusiast or a tech nerd.


One of the most significant issues with Bitcoin mining is its enormous energy consumption. The process of mining Bitcoin involves solving complex mathematical problems, which requires vast amounts of computational power. As a result, miners use powerful hardware that consumes a substantial amount of electricity. This energy consumption contributes to carbon emissions and puts a strain on energy resources in some regions. In fact, research suggests that Bitcoin mining consumes more energy than some small countries. This environmental impact has sparked debates about the sustainability and long-term viability of cryptocurrency mining.

Another concern is the centralization of mining power. Over time, Bitcoin mining has become increasingly concentrated in the hands of a few major players and mining pools. These entities possess a significant amount of computing power and dominate the mining process. This concentration of power raises questions about the decentralization and security of the Bitcoin network. If a majority of mining power were controlled by a single entity or group of collaborating entities, it could potentially compromise the integrity and security of the entire system.

Furthermore, the cost of entry into Bitcoin mining has risen dramatically over the years. Initially, mining could be done on personal computers, but as the difficulty level increased, specialized hardware called ASICs (Application-Specific Integrated Circuits) became necessary. These ASICs are expensive to purchase and maintain, making it difficult for individuals without substantial financial resources to participate in mining. This further contributes to the centralization of mining power and reduces the potential for decentralized participation in the network.

Moreover, there have been cases of illegal activities associated with Bitcoin mining, including the use of mining farms to generate funds for criminal purposes. As cryptocurrencies provide anonymity and can facilitate transactions that are difficult to trace, they have been exploited for money laundering, ransomware attacks, and other illicit activities. While it's important to note that these activities are not exclusive to Bitcoin mining and can occur with other cryptocurrencies as well, they do highlight the potential dark side of this industry.

It's crucial to address these issues and explore ways to make cryptocurrency mining more sustainable, decentralized, and secure. Efforts are underway to develop alternative consensus mechanisms that consume less energy, such as Proof-of-Stake, and to promote the use of renewable energy in mining operations. Additionally, regulatory measures are being considered to ensure compliance with legal frameworks and combat illicit activities associated with cryptocurrencies.

aspects of the dark side of Bitcoin mining:

1. E-waste: The hardware used for Bitcoin mining, such as ASICs, becomes obsolete relatively quickly due to the constantly increasing difficulty of mining. As a result, old and inefficient mining equipment is often discarded, contributing to electronic waste. This e-waste can have negative environmental impacts if not properly recycled or disposed of.

2. Geopolitical Concerns: Bitcoin mining is not evenly distributed globally and is often concentrated in regions with cheap electricity and favorable regulatory environments. This leads to concerns about geopolitical control, as certain countries or entities can potentially gain significant influence and control over the Bitcoin network. It also highlights the potential for censorship or manipulation of the network by those with concentrated mining power.

3. Social Implications: The concentration of mining power and the requirement for specialized hardware means that many individuals and small-scale miners are excluded from participating in the mining process. This further exacerbates existing wealth inequalities and creates barriers to entry for individuals looking to get involved in cryptocurrency mining.

4. Volatility and Financial Risks: Bitcoin mining can be a risky endeavor, as the profitability of mining is heavily dependent on the price of Bitcoin. Fluctuations in the price can lead to significant financial losses for miners, especially if their operational costs exceed their mining rewards. This volatility can make it challenging for miners to plan and sustain their operations in the long term.

5. Energy Consumption in Developing Countries: Some Bitcoin mining operations are set up in countries with lower energy costs, such as developing nations. However, these operations can put strain on local energy resources and result in higher electricity prices for residents. Additionally, the revenue generated from mining may not necessarily benefit the local communities.