Make Up Your Mind

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This isn't America's Finest News Source, it is this morning's Crypto page from Bloomberg. I couldn't resist posting it.

There Is No Planet B: Part 2

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In Part 1 I applied basic arithmetic to the logistics of Elon Musk's claimed plans for colonizing Mars in 2050 to show they were implausible. Below the fold I continue, first by discussing Maciej Cegłowski's equally basic dissection of NASA's economically implausible plans for Mars in Why Not Mars?. Second, by reviewing the host of non-logistical and non-economic problems facing humans attempting to survive on Mars based on:

• Kelley and Zach Weinersmith's A City on Mars.
• Towards Sustainable Horizons: A Comprehensive Blueprint for Mars Colonization by Florian Neukart.

Why Worry About Resources?

The attitude of the crypto-bros and tech more generally is that they are going to make so much money that paying for whatever resource they need to make it will be a drop in the ocean. Amd that externalities such as carbom emissions are someone else's problem.

I discussed Proof-of-Work's scandalous waste of energy in my EE380 talk, Can We Mitigate Cryptocurrencies' Externalities? and elsewhere, since 2017 often citing the work of Alex de Vries. Two years ago de Vries and Christian Stoll's Bitcoin's growing e-waste problem pointed out that in addition to mining rig's direct waste of power, their short economic life drove a massive e-waste problem, adding the embedded energy of the hardware to the problem.

de Vries Fig. 1

Now, de Vries' Bitcoin’s growing water footprint reveals that supporting gambling, money laundering and crime causes yet another massive waste of resources.

But that's not all. de Vries has joined a growing chorus of researchers showing that the VC's pivot to AI wastes similar massive amounts of power. Can analysis of AI's e-waste and water consumption be far behind?

Below the fold I discuss papers by de Vries and others on this issue.

There Is No Planet B: Part 1

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Anything Elon Musk says must be treated skeptically. This is particularly true of anything involving timescales (see Tesla robotaxis). And it is even more true of Musk's plans for visiting and eventually colonizing Mars.

Below the fold in part 1 of this two-part post, I apply some arithmetic just to the logistics of Musk's plans for Mars. Part 2 isn't specific to Musk's plans; I discuss two attempts to list the set of "knowns" about Mars exploration, for which the science is fairly clear but the engineering and the economics don't exist, and the much larger set of "known unknowns", critical aspects requiring robust solutions for which the science, let alone the engineering, doesn't exist:

• Kelley and Zach Weinersmith's A City on Mars.
• Maciej Cegłowski's Why Not Mars?.

Decentralized Finance Isn't

A major theme of this blog since 2014's Economies of Scale in Peer-to-Peer Networks has been that decentralized systems aren't, because economic forces overwhelm the technologies of decentralization. Last year I noted that this rule applied to Decentralized Finance (DeFi) in Shadow Banking 2.0 based on Prof. Hilary Allen's DeFi: Shadow Banking 2.0? which she summarizes thus:

TL;DR: DeFi is neither decentralized, nor very good finance, so regulators should have no qualms about clamping down on it to protect the stability of our financial system and broader economy.

And also DeFi risks and the decentralisation illusion by Sirio Aramonte, Wenqian Huang and Andreas Schrimpf of the Bank for International Settlements who write:

While the main vision of DeFi’s proponents is intermediation without centralised entities, we argue that some form of centralisation is inevitable. As such, there is a “decentralisation illusion”. First and foremost, centralised governance is needed to take strategic and operational decisions. In addition, some features in DeFi, notably the consensus mechanism, favour a concentration of power.

Below the fold I look at new evidence that the process of centralizing DeFi is essentially complete.

Desperately Seeking Retail

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The SEC has a long history of refusing to approve spot Bitcoin ETFs, on the reasonable basis that the Bitcoin market was heavily manipulated. Crypto-skeptics like Bitfinex'ed and Davd Gerard have been pointing out obvious instances of manipulation for many years, and there is a considerable academic literature demonstrating manipulation, such as Crypto Wash Trading by Lin William Cong et al, which demonstrates:

abnormal first-significant-digit distributions, size rounding, and transaction tail distributions on unregulated exchanges reveal rampant manipulations unlikely driven by strategy or exchange heterogeneity. We quantify the wash trading on each unregulated exchange, which averaged over 70% of the reported volume.

Unfortunately, despite knowing about the manipulation, the CFTC approved Bitcoin futures ETFs. Among the requests that the SEC refused was one from Grayscale Bitcoin Trust. Grayscale sued the SEC and, back in August, the panel of judges ruled in their favor:

The court's panel of judges said Grayscale showed that its proposed bitcoin ETF is "materially similar" to the approved bitcoin futures ETFs. That's because the underlying assets— bitcoin and bitcoin futures - are "closely correlated," and because the surveillance sharing agreements with the CME are "identical and should have the same likelihood of detecting fraudulent or manipulative conduct in the market for bitcoin."

With that in mind, the court ruled that the SEC was "arbitrary and capricious" to reject the filing because it "never explained why Grayscale owning bitcoins rather than bitcoin futures affects the CME’s ability to detect fraud."

The prospect of the SEC approving this ETF and others from, for example, BlackRock and Fidelity led to something of a buying frenzy in Bitcoin as shown in the "price" chart, and in headlines such as Bitcoin ETF Exuberance Drives Four-Week ‘Nothing for Sale’ Rally:

Bitcoin is climbing for a fourth consecutive week, with the digital token’s price lingering just below an 18-month high of $38,000, as more investors bet that US exchange-traded funds that hold the largest cryptocurrency are on the verge of winning regulatory approval.

Below the fold I look into where this euphoria came from, and why it might be misplaced

NDSA Sustainability Excellence Award

Yesterday, at the DigiPres conference, Vicky Reich and I were awarded a "Sustainability Excellence Award" by the National Digital Stewardship Alliance. This is a tribute to the sustained hard work of the entire LOCKSS team over more than a quarter-century.

Below the fold are the citation and our response.