Bitcoin Frenzy: Virtual Currency Tops $1000, But What’s The Real Cost?

on Wednesday, Nov. 27th

Warning: Opinions below.

It’s the day before Thanksgiving and I’m fighting a cold, so my brain isn’t working as well as it should be, but I’ve been thinking a lot about Bitcoin lately and it has me concerned.

Today the virtual currency–which has been the subject of Congressional interest and is popular with everyone from digital native libertarians to wannabe assassin indexes–reached a trading milestone: $1000 a coin.

As The Verge points out the price was around $200 a coin a month ago, which means that we’re seeing a massive spike in interest. Anecdotally speaking I’ve seen a few people in my own feeds who are starting to invest.

I really wish they wouldn’t.

Not because of the currencies links to digitally organized crime. No, if that was a reason to not hold a currency then no money would be ethically clean.

What I’m concerned about is that the Bitcoin market has attracted Silicon Valley 1%-ers. Speculation is driving up the stock and more and more processing power is being put towards the speculative boom.

We could be doing better things, as a species, with the processing power used up by Bitcoin than to make a bunch of Valley guys really rich. How much processing power are we talking about?

At any given moment, Bitcoin’s peer-to-peer network contains thousands of computers linked together to generate more than 1,000 petaflops of raw computing power. To put that in perspective, the world’s fastest supercomputer, Titan, runs at less than 18 petaflops. The Bitcoin network is sucking down nearly $200,000 a day in electricity costs, according to one tracking site’s estimate.

That’s from a CNN article back in March. You just know the power usage has gotten more intense.

I can’t help but feel like the Bitcoin boom is the fiddle in Nero’s hands as the whole planet burns.

There’s some good in the system that Bitcoin has developed in terms of digital signatures and in advancing the idea of a stateless currency, but this run on Bitcoins puts a happy-go-lucky mask on the tech industry’s worst values: the never-ending pursuit of the get-rich scheme at any expense.

Image source: Cups and Cakes Bakery

Follow Noah Nelson on Twitter (@noahjnelson)

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