[roenxi]

> ...speculators who believe that they can sell it for more than they bought it for...

Which, assuming that the individual speculators are intelligent and rational, has the emergent property of providing something that is socially useful. And if they are stupid and irrational, it'll bankrupt the lot of them so that they can't waste that much money again.

The economy is a cruel beast, but it is much better than you or I at deciding what needs to happen to get people what they need. If something like bitcoin really is just a money burning exercise with no redeeming property, sooner or later it'll go bankrupt and disappear back into obscurity. It can't be a hot new thing forever. And "speculators" only have power when they are consistently right. If they routinely make big gambles and get it wrong then they don't get to speculate for long.

[randalluk]

As the article says

>Libertarianism's attraction is based on ignoring externalities, and cryptocurrencies are no exception.

The economy as currently regulated doesn't correctly price in externalities such as the ongoing cost of global heating generated by burning fossil fuels.

[roenxi]

I'm all for including externalities. My usual argument is if you look at positive and negative externalities, fossil fuels are a massive win.

People seem to struggle with positive externalities so the argument usually falls flat, and the situation is too clear to me to be able to spell it out easily. But without fossil fuels, 40-80% of the modern world would have been all but impossible. The knock-on effects of abundant cheap energy (and precursor materials to plastics) aren't being priced in.

[munch117]

The 'positive externalities' of fossil fuels are already accounted for in our economic system: When mining for raw materials, the price that the miner is paid in the first sale is payment for that. And ditto in every subsequent sale: The benefits to the buyer goes into setting the price.

I am not an expert on economics nomenclature, but ISTM you can't really call that externalities when it's already being rewarded by the current economic system. Wouldn't that be an "internality" or something? They are already included.

Unlike the negative externalities from pollution. In the absence of something like a carbon tax, they are not included.

[roenxi]

I've never bought any oil directly. It is beyond question that if oil & gas producers disappeared I'd be much worse off (it'd be physically quite difficult for me to get food, for example, and I'd likely starve to death). That is the informal definition of an externality right there; my entire lifestyle is being enabled by a deal that I'm not party to.

And even if I've got the definition wrong, the oil and gas producers are creating huge amounts of value that are being captured by other actors in the economy (like me). If we fairly evened out the harms and benefits, they deserve subsidies rather than taxes. Obviously nobody sane is going to advocate for that, but if we want to price in externalities that is the logical outcome.

This isn't obscure logic. People often point out that the measurable value of what blue collar workers produce is far in excess of their pay and follow it up with the idea that we should force the market to pay them more. It isn't a good idea but it is logical in as far as it goes.

[randalluk]

>That is the informal definition of an externality right there.

You pay a grocer who pays a farmer who pays a fertiliser manufacturer who buys some natural gas. You wanting to eat has a reasonably direct impact on demand for fossil fuels, and therefore prices and profits. The oil company doesn't capture all the value, partly because they're not doing all the work, and partly because of competition.

If the oil companies went away tomorrow, the price of oil would skyrocket, because people want to eat, and new oil companies would form to meet the demand. There is no need for subsidy.

Positive externalities are things like "I financed construction of a road for my own commercial reasons, but other people can use it for free". Or "I wanted to renovate the rundown building I live in, but doing so made my neighbour happy too".

But to come back to the point, finally. The argument is that we know crypto mining has negative externalities (crypto miners don't have to reimburse people negatively impacted by climate change). The article argues that permissionless blockchains are doomed, ultimately, to fail anyway. So they will destroy value, by pointlessly wasting fuel AND by harming the climate (which doesn't factor into a miner's decision-making because it's an externality).

[roenxi]

> There is no need for subsidy.

There is if we add on a tax for the negative externalities, we need to consider both positive and negative externalities to get the tax right. The evidence is that the more fossil fuels we use the better off people are. If we add a tax on we'll use less, which is pushing the market in the wrong direction.

It is very hard to argue coherently that less & more expensive energy leads to better outcomes. The evidence is that in countries like China, Africa & India everyone benefits a lot more from using more fossil fuels than the cost of any negative externalities. We've run a big natural experiment here, the outcome is that more fossil fuels == rapidly improving living standards. Less fossil fuels leads to poverty.

Breaking growth in fossil fuels with a tax would be doing much more harm than good, even to bystanders. So there must be a large positive externality here somewhere. Because if you reduce the negative externalities and the outcome is much worse for everyone then there was probably a big positive externality in there somewhere.

I dunno, I suppose as a question - who do you think is bearing the cost of these negative externalities right now? Because it sounds from your reasoning like you are imagining a group of people who don't use fossil fuels or sit downstream of fossil fuels (so they can't influence the market with price signals). Who are these people, demographically speaking? And to preempt my argument, would they not be better off if we got them access to fossil fuel rather than worrying about negative externalities as they sit outside the system? It worked great for China.

[munch117]

Sure. Fossil fuels are valuable to society. They made the industrial revolution possible. If they were to disappear tomorrow, much hardship would ensue.

They are, however, overused, because the negative externalities are not properly accounted for.

> And even if I've got the definition wrong, the oil and gas producers are creating huge amounts of value that are being captured by other actors in the economy (like me).

That's how all market transactions work: Whenever you buy something, it's because the value you derive from the purchase is higher than the price you pay. All business has this value-add aspect. When you buy a jacket so you don't freeze to death in the winter, that doesn't mean you are beholden to the clothes manufacturer for your life.

[roenxi]

> If they were to disappear tomorrow, much hardship would ensue. They are, however, overused...

No, that isn't true. There is a reason the environmentalists have had so much trouble getting their policies to catch and it is the fact that statements like this are manifestly wrong. The hardship caused by fossil fuels is minute compared to the benefits. If anything, oil and gas are underused. There is little question that if we could get more people more oil & gas, lifestyles would improve more than damage done by negative externalities. We've seen this play out in multiple countries. The only reason not to be pushing them like mad is that we're about to run out of useful reserves.

The benefits of a modern economy powered by cheap energy substantially outweigh the negatives. More cheap energy pretty much inevitably increases the general good. Taxing that energy doesn't help.

> That's how all market transactions work: Whenever you buy something, it's because the value you derive from the purchase is higher than the price you pay.

Yeah, but that isn't an externality. An externality is something that happens to a third part to a transaction - which is my relationship to the fossil fuel industry. I purchase very little fossil fuel.

The externality is they enable other deals to happen that would otherwise be impossible. Like my groceries.

[randalluk]

There surely are positive externalities, but the very useful things we burn fossil fuels for are reflected in the price - cheap or no. Those primary reasons for burning fuel will have all sorts of externalities, positive and negative. And one would expect similar externalities from the work done by renewable energy.

If your position is simply that we are fortunate our planet was/is abundant in fossil fuels, I don't disagree (ideally there wouldn't have been enough to completely wreck the climate we depend on, but...). But the issue is whether we should trust the market in respect to cryptocurrency mining specifically. The history of human civilisation seems a bit beyond the scope.

[roenxi]

> but the very useful things we burn fossil fuels for are reflected in the price

If we imagine a counterfactual where there were no fossil fuels, double-digit percentages of the world's population wouldn't exist.

There is no way that the oil and gas producing companies have made money on the same scale as the value they've created by enabling billions of humans to exist. No way at all. There is obviously something very powerful happening that is more than offsetting the notional damage that they will theoretically do at some point in the future to a relatively small percentage of humans.

If we balance out the harms and benefits that the coal and petroleum miners have caused to the rest of humanity, the ledger is overwhelmingly in their favour. I can't even estimate the numbers involved but based on the fact that I'm not slaving away for a fossil fuel company double digit percentages of my life I can tell it isn't close.

[ericd]

Sure. Bring on the carbon taxes.

[derac]

This is flawed libertarian thinking. For example, if a scammer called your grandmother and got her to send them her life savings, it wouldn't be a good thing just because she is "too stupid" to have the money.

[roenxi]

The logic does break down for criminal activity. But:

(1) Mr. Wog93 was talking about speculators, not criminals.

(2) If any of my grandmothers were still alive then they could be scammed in any asset class. Bitcoin is riskier but, frankly, anyone crazy enough to "invest" in bitcoin is probably going to lose all their money regardless of whether they get scammed or not. So this grandmother test is a bit of a wash in my eyes.

The only thing that makes me special is I'm humble enough to say maybe I'm completely wrong in my opinions so other people should be allowed to take risks I think are stupid. There is a fair-enough system that will sort out who is right and who is wrong based on evidence.

[AussieWog93]

>Mr. Wog93

Thank you for using my correct title.